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UK’s Asset Management Sector Lobbies for Blockchain Adoption

The cryptocurrency market may have hit hard times, but the blockchain technology that underpins the industry is still going strong. In Britain, the asset management industry has been lobbying for the government to adopt blockchain and develop a new class of funds that leverage the technology.

Thanks to its decentralized nature, blockchain can benefit financial companies by enhancing security, increasing transparency, providing immediate traceability and automation, and increasing efficiency and speed. Last week, one of the largest trade bodies in the United Kingdom called on the government to work on approving blockchain-traded funds that will issue digital tokens rather than fund units or traditional shares to investors.

The Investment Association, which currently represents the UK’s asset management industry, says leveraging blockchain will allow end investors to make “significant cost savings” by allowing them to make the usually laborious process of buying and selling mutual funds more efficient. According to Chris Cummings, the association’s chief executive, it is vital that regulators, policymakers and industry participants work together to drive innovation without delay.

Such innovation would improve the cost, quality and efficiency of the investment experience and make the UK funds’ industry much more competitive on the global scale, he said. The association will propose the formation of a task force to investigate how blockchain technology can be used to speed up the creation of novel products and services.

The new task force would also look into how blockchain could allow investors to customize their portfolios with cryptos and private holdings. Furthermore, the Investment Association is also urging the Financial Conduct Authority to determine whether or not mutual funds should be able to own cryptocurrencies and other digital assets.  If the FCA expedites the approval of blockchain-traded funds, they could roll out by the end of Q2 2023.

While the UK market still doesn’t have any blockchain-traded funds, Franklin Templeton, a multinational holding company based in California, launched America’s first mutual fund to use blockchain in April 2022. Players in the UK financial markets are working to catch up to the U.S. market. A fintech group called FundAdminChain has been working with four global asset managers and the London Stock Exchange to develop live tokenized cryptocurrency funds for the UK.

FundAdminChain managing director Brian McNulty says that tokenized funds will make investment systems more efficient by allowing for instant settlement, greater transparency and increased accuracy in data and analytics. However, he noted that the UK market will need regulatory support amid all this technological innovation to ensure that it stays competitive with other markets.

As more institutional users join the blockchain tech revolution, companies such as Canaan Inc. (NASDAQ: CAN) will see interest in their services grow not just in the United States but around the world as well.

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