According to the IA, which represents the UK’s £10trn asset management industry, this will reduce administrative costs for consumers and improve efficiency through quicker settlement and improved transparency of transactions.
Blockchain-traded funds, which would issue digital tokens to investors instead of traditional shares or fund units, may also broaden the assets held within a fund by increasing access to private markets and illiquid assets, the association said.
UK’s bid for crypto hub: Is the future tokenised funds?
“With the ever-quickening pace of technological change, the investment management industry, regulators and policy makers must work together to drive forward innovation without delay,” said Chris Cummings, CEO of the IA.
“Greater innovation will not only boost the overall competitiveness of the UK funds industry, but will improve the cost, efficiency and quality of the investment experience.”
In a report published this week, the IA proposed the establishment of regulated routes for native digital asset exposure, and an assessment of the eligibility of cryptoassets within UCITS and domestic funds for well-diversified portfolios.
AllianceBernstein takes steps towards tokenisation with blockchain collaboration
“Recent market volatility highlights the importance of defining the ‘rules of the road’ for cryptoassets, which will help mitigate the risk of loss and harm to consumers and ensure an appropriate regulatory perimeter,” the report read.
In March this year, the IA told Investment Week that it was already in discussions with firms and the regulator on tokenised funds. John Allan, fund operations specialist, explained that “it is vital that the UK domicile is able to keep pace with innovations such as these”.
Last month, Investment Week reported that AllianceBernstein had partnered with specialist in blockchain technology Allfunds Blockchain as it looked to tap into the benefits of tokenisation.