Baillie Gifford welcomed authorisation from the Securities and Futures Commission (SFC) for Hong Kong’s first fully native tokenised investment fund for professional investors.

The approval continues the development of Hong Kong’s regulated digital asset ecosystem, reinforcing the city’s ambition to become a leading international hub for tokenisation and cross-border digital finance.

The Baillie Gifford Enhanced Yield Fund (BAGEY) is an actively managed portfolio of short-duration government and corporate bonds. Developed with BNY, this further expands Hong Kong’s tokenised investment market into fixed income.

Unlike some existing tokenised funds that rely on intermediaries or Special Purpose Vehicle (SPV) structures, BAGEY is issued natively on public blockchain infrastructure. Under this structure, the token itself represents the investor’s holding and the blockchain serves as the official record of ownership. By eliminating the need for parallel records, this approach creates a simpler, more transparent, and legally robust framework built from the ground up for digital markets, while fully maintaining the standards of a regulated investment fund.

Eligible professional investors can subscribe and redeem Fund tokens using fiat currency or stablecoins, initially USDC2. The Fund is denominated in US dollars and is available on Ethereum and Solana. Utilising these stablecoin rails, BAGEY will also facilitate T+0 redemptions up to 10% of NAV, and feature an indicative NAV for secondary market trading and ecosystem use cases.

The approval supports Hong Kong’s ambition to develop regulated markets for tokenised real-world assets through initiatives such as the Hong Kong Monetary Authority’s Fintech 2030 strategy and Project Ensemble.

Theo Golden, Head of Digital Assets and Tokenisation at Baillie Gifford, said:

“Hong Kong has established itself as one of the world’s leading jurisdictions for regulated tokenisation, and today’s approval from the SFC is an important step in that journey. It shows how regulators and industry can bring new forms of investment products and utility to market, without compromising investor protection.”

“Tokenisation will only matter if it makes finance fundamentally better. Most tokenised funds place a digital wrapper around existing funds, BAGEY is different. Investors hold the fund directly on blockchain, creating a simpler ownership model for increasingly digital financial markets. Our ambition is not tokenisation for its own sake, but to build investment infrastructure that clients can trust – with cleaner ownership, stronger governance and faster settlement. Same discipline; better rails.”

Baillie Gifford collaborated with BNY to co-design the product – combining Baillie Gifford’s active investment expertise and long-term approach, with BNY’s innovative, resilient infrastructure. BNY will provide tokenisation and wallet infrastructure for BAGEY, supporting a direct issuance model designed to reduce operational complexity and improve transparency. NatWest Trustee and Depositary Services Limited will act as the fund’s Depositary.

Stuart Dunbar, Partner at Baillie Gifford, added:

“We have been a first mover in this space, but done so with clients in mind. Tokenisation is not a short-term theme for us, we believe it will become part of mainstream investment infrastructure over time. Our role is to give clients access to this innovation through investment structures that are robust, transparent and built to endure.”

Source: Baillie Gifford