Following the Financial Conduct Authority’s (FCA’s) guidance to support innovation in fund tokenisation, we sat down with John Allan, innovation and operating unit and director, Engine at the Investment Association, to discuss his thoughts on how the tokenisation industry has moved forward in recent years.
CP: How has the IA’s role within tokenisation evolved as the shift to digital assets becomes more prominent?
Over the past year, we have been focused on the practical implementation of tokenisation innovations. Early on, much of the industry debate was about whether tokenisation could work within existing legal and regulatory frameworks. Today, that question has largely been answered. Our focus now is on helping firms take the next step by moving from pilots and proofs of concept to something that can operate at scale, within the regulated system.
For the IA, that means working closely with members and policymakers to turn regulatory clarity into deployable operating models, addressing the real‑world issues firms face around governance, operational resilience, tax and integration with existing market infrastructure. The aim is to make tokenisation something firms can use and start enjoying the benefits of.
CP: What changes have you noticed among your members as demand for digital asset products grows?
The most noticeable change is that conversations have become far more concrete.
A year ago, the emphasis was on exploration – setting up digital asset innovation teams, running small pilots, testing the technology. Now, members are asking practical questions about implementation: how tokenised structures work alongside existing funds, how they interact with custody and settlement, and how they fit within day‑to‑day operating models.
We are also seeing interest broaden beyond new products to how digital infrastructure can improve core processes. Liquidity management, collateral efficiency and post‑trade processes are all areas where tokenisation is starting to feel relevant to mainstream operations rather than niche innovation.
Overall, digital assets are increasingly being viewed less as a separate category and more as new market-plumbing infrastructure that can make funds more efficient, resilient and transparent.
CP: Has your work with the FCA changed since other regions published more proactive legislation around digital assets (GENIUS Act, MiCA, etc.)?
As a trade association representing members operating across multiple jurisdictions, it has been helpful to watch how international regulatory bodies have approached legislating digital assets.
Frameworks such as MiCA in the EU and the GENIUS Act in the US have provided valuable clarity in their respective markets, particularly for firms operating through European fund centres or engaging with digital forms of money. They have helped demonstrate how regulatory certainty can support responsible institutional adoption of digital assets, which has enriched our engagement in the UK. It allows more constructive domestic discussions about interoperability, cross‑border operating models and how global firms manage fragmentation across jurisdictions.
The UK’s approach remains distinct – grounded in outcomes-based, technology-agnostic regulation – but it is deliberately internationally aware. That matters if tokenisation is to scale in a way that works for firms and investors operating globally.
CP: You said last year your main focus was in the liquidity products and alternatives space — has that changed?
That focus is still very much there, but the picture has widened.
Liquidity products remain the most mature and compelling use cases, particularly where tokenisation solves tangible problems – such as improving collateral mobility or reducing friction in settlement. These are areas where the benefits are immediate and measurable.
What has changed is that these use cases are increasingly acting as entry points into wider adoption. We are now seeing interest extend into authorised funds, fund administration and broader market infrastructure, alongside growing links to work on digital cash and delivery‑versus‑payment models.
So, while liquidity remains central, it is no longer the end point. Now, it is part of a broader transition toward digitally enabled fund operations.
CP: Where do you think the market is heading next?
The next phase is about integration and normalisation.
We are moving beyond asking what can be tokenised, towards asking what should be tokenised – and where digital infrastructure genuinely improves outcomes for all types of investors, including retail and market stability. That means better integration with existing fund structures, clearer links to settlement and cash, and greater focus on resilience and scalability.
Through the Investment Management Taskforce, which launched in February, we are helping ensure that this integration work is seen across retail and institutional channels, and the dedicated technology workstream is already capturing the significant opportunities offered by innovation.
As this next phase progresses, tokenisation won’t feel like a separate market. It will simply be part of how funds are run. They will be reliable, robust and, ideally, rather unexciting. And in institutional markets, that is often the clearest sign that change has truly arrived.
You can read our first interview with Allan, conducted in March 2025, here.
