UK FCA Backs Tokenized Funds in €14 Trillion Market Push

- The FCA aims to promote tokenized assets to foster competition and streamline processes. - Major UK banks, including HSBC and NatWest, are piloting tokenized deposit programs. The UK's Financial Conduct Authority (FCA) has announced plans to support asset tokenization as part of its initiative to enhance innovation and competition in the asset management industry. The financial regulator believes tokenization will simplify operational processes, reduce costs, and enable more personalized investment options for consumers. According to a Cryptopolitan report on October 14, 2025, the FCA's tokenization initiative is a pivotal element in the UK's broader strategy to establish itself as a global leader in digital finance. In support of this goal, leading UK banks such as HSBC, NatWest, and Lloyds have launched pilot programs for tokenized deposits. These programs, which aim to explore applications like mortgage refinancing, are set to run until mid-2026. Reflecting a significant shift in its approach to digital finance, the FCA has pledged to provide regulatory clarity for companies adopting tokenization technology. The agency lauds tokenization as a transformative innovation that could deliver substantial benefits for both the asset management industry and its clients. In tandem, the Bank of England has stated a strategic preference for tokenization over stablecoins. Governor Andrew Bailey underscored tokenization's value, noting that it operates within the existing regulatory framework of the banking system. Consequently, the pilot programs led by major banks align closely with this regulatory stance and are key steps toward exploring broader applications of tokenized finance. This development underscores the UK’s ambition to spearhead the evolution of digital asset frameworks. As major financial institutions actively engage in exploratory initiatives, the FCA’s endorsement could shape the next phase of asset management innovation.