The Investment Association, which represents investment managers in Britain is working hard to speed up approval of funds traded on the blockchain. The idea is to substitute traditional shares of local governments and regulators in the financial sector with digital tokens. According to a report by a leading newspaper, this trade body is strongly urging the government to set up a new fund class which uses blockchain technology. It wants a new task force to be created. The task force’s job is to look closely at the workings of distributed ledger technology and how it can speed up new product and service creation.
The reasons behind such a push by the Investment Association are simplification of procedures already in place for buying and selling and cost savings to investors. According to Chris Cummings of the Investment Association, innovation will definitely boost the competitiveness within the funds industry. It will also improve the efficiency, the quality of investing and lower costs.
Per news reports, it is very likely that blockchain related trading for funds could available as soon as July 2023. This depends on how fast the FCA gives its stamp of approval. The Investment Association also lobbied the regulatory authority to consider the option of letting traditional fund companies to invest in crypto and digital assets. If the FCA considers it and is interested, it would take time to push through the required regulation. In the US, the first on-chain fund was launched in 2021. This mutual fund was set up by Franklin Templeton and is currently processing transactions and records ownership in shares.