FCA and Bank of England Outline Fund Tokenization Vision
The UK's Financial Conduct Authority and Bank of England have published their joint regulatory position on fund tokenization. The document covers current supervisory expectations for financial market infrastructures and outlines a forward-looking vision for broader RWA tokenization policy.
Yuri Konnov
The publication arrived weeks after the FCA's April 2026 policy statement on fund tokenization, which confirmed that blockchain records can now serve as a firm's primary books and records, removing the prior requirement to maintain a duplicate off-chain register. That earlier statement established the operational baseline; the May Call for Input extends the framework into wholesale market infrastructure, asking participants to identify where existing rules and infrastructure support or constrain the safe use of the technology.
On the settlement side, the Bank of England outlined a staged programme to extend operating hours on CHAPS, the system used for high-value and time-sensitive transfers. Beginning in September 2027, CHAPS will extend its 12-hour weekday cycle to start as early as 1:30 a.m., a change designed to create overlap with Asian trading hours. The central bank plans to introduce Sunday and bank holiday settlement no earlier than 2029, followed by a continuous 22-hour daily window — described as a 22x6 schedule — no earlier than 2031. The Bank also committed to launching a live synchronization service targeted for 2028, and said it is working to enable tokenized equivalents of already eligible assets to be used as collateral both at central counterparties and in its own central bank operations.
The Bank of England's consultation on RTGS and CHAPS settlement hours sets out the staged approach as subject to industry readiness, meaning the 2029 and 2031 milestones carry conditionality. The regulators framed the overall initiative as a response to direct industry feedback: firms had indicated they needed greater regulatory certainty before committing capital to tokenization infrastructure at scale.
The Digital Securities Sandbox, which currently has 16 firms testing live issuance and settlement of tokenized assets in a regulated environment, provides the operational backdrop for the consultation. The regulators described it as the most advanced live tokenization testing environment of any G7 regulator. The sandbox experience appears to have informed the specific infrastructure commitments in the May publication, particularly the synchronization service and the collateral eligibility work.
Market participants have until July 3, 2026 to submit responses to the Call for Input. According to the cryptotimes.io account of the announcement, the FCA and Bank of England said they will hold industry workshops after that deadline, publish a feedback statement in the summer of 2026, and issue a cross-authority roadmap for digital wholesale market development later in the year. The roadmap is expected to cover the FCA, Bank of England, and the Prudential Regulation Authority, which simultaneously published Dear CEO letters updating expectations on prudential treatment of tokenized assets, stablecoins, and cryptoasset exposures.
The CoinDesk analysis of the settlement timeline noted that the process toward near-continuous CHAPS operation begins in 2027, with the central bank framing the extension as a prerequisite for tokenized asset settlement to function at institutional scale. The FCA's definition of tokenization in the press release — the creation of a digital representation of a real-world asset such as a share, bond, or unit of currency on a digital ledger — signals that the framework is intended to cover a broad asset class range, not only fund units.
Several material details remain unresolved in the published documents. The Call for Input does not specify how the prudential treatment framework will handle tokenized assets where the legal rights of token holders diverge from those of holders of the underlying instrument. The regulators have not disclosed the technical specifications for the 2028 synchronization service, the governance structure for the cross-authority roadmap, or the criteria that would determine whether industry readiness conditions for the 2029 and 2031 settlement hour extensions have been met.
The immediate effect of the May 2026 publication is to establish a documented regulatory position on tokenized collateral and settlement instruments, remove the off-chain record duplication requirement introduced in the April policy statement, and set binding infrastructure commitments for CHAPS extension beginning September 2027. The documents do not establish a live tokenized wholesale market, a completed cross-authority roadmap, or confirmed prudential treatment rules for tokenized assets where legal rights are not directly comparable to non-tokenized equivalents — those outputs remain contingent on the consultation process closing July 3 and the subsequent feedback and roadmap work scheduled for later in 2026.
