Thursday 07 July 2022 13:31

The Investment Association has set out a vision for Investment Fund 3.0

The UK’s leading investment body called on the government and regulators to harness the benefits of cryptocurrencies and decentralized finance today, as it claimed the industry was on the cusp of a “major technological transformation”.

In a new ‘Investing for the Future’ report, the Investment Association (IA) has outlined a vision for ‘Investment Fund 3.0’ which it says would be based on ‘technology innovation’ and a ‘regulatory framework turned to the future”.

AI is now pushing ministers and the Financial Conduct Authority to set up a task force to harness the benefits of decentralized finance – a financial ecosystem based on blockchain technology – and establish regulations for tokenized funds to operate in the UK. United.

“At the heart of the investment fund 3.0 vision will likely be the increased adoption of tokenization, which will ultimately reduce costs for consumers and improve the efficiency of fund distribution, through faster settlement and enhanced transaction transparency,” the AI ​​said in a statement.

“Tokenization can also expand the assets held in a fund by increasing access to private markets and illiquid assets.”

The report also proposed the creation of regulated pathways for cryptocurrencies and exposure to digital assets for investment managers, as well as an assessment of the eligibility of cryptoassets among certain portfolios.

Investment Association boss Chris Cummings said modernization was key in the industry.

“With the ever-accelerating pace of technological change, the investment management industry, regulators and policymakers must work together to drive innovation forward without delay,” Cummings said.

“Greater innovation will not only boost the overall competitiveness of the UK fund industry, but will also improve the cost, efficiency and quality of the investment experience.”

Calls for a new regulatory framework come as the Bank of England this week called for a new regulatory regime for crypto assets to safeguard financial stability, following the recent fall in crypto markets.

“This underscored the need to strengthen regulatory and enforcement frameworks to address evolving crypto-asset markets and activities,” the bank said in its quarterly Financial Stability Report.