Baillie Gifford gets Hong Kong nod for first digitally native tokenised fund
Synopsis
Hong Kong has approved its first 'digitally native' tokenised fund — Baillie Gifford's BAGEY — where the public blockchain is the legal ownership record, not just a mirror. This is a structural leap beyond existing digital-twin models and a direct challenge to US dominance in tokenised finance.
Key Takeaways
Baillie Gifford received Securities and Futures Commission approval on 15 July 2026 to launch Hong Kong 's first digitally native tokenised fund.
The Baillie Gifford Enhanced Yield Fund (BAGEY) is an actively managed portfolio of short-duration government and corporate bonds.
Unlike 'digital twin' funds, BAGEY uses the public blockchain as the official legal record of ownership, giving token holders full asset rights.
The fund is available to professional investors and enables 24/7 instant settlement and fractional ownership.
The SFC 's November 2023 tokenisation circular did not prohibit such products, effectively paving the regulatory path.
Hong Kong is competing directly with the US , where rivals including Franklin Templeton and BlackRock have already launched tokenised fund products.
British asset manager Baillie Gifford has received approval from Hong Kong's Securities and Futures Commission (SFC) to launch the city's first 'digitally native' tokenised fund, a milestone that positions Hong Kong as a serious contender to the United States in the race to dominate global crypto-finance infrastructure. The fund, named the Baillie Gifford Enhanced Yield Fund (BAGEY), was approved and announced on Wednesday, 15 July 2026.
What makes BAGEY different
Unlike the majority of tokenised funds currently in circulation, BAGEY is structured as a 'digitally native' product — meaning the public blockchain serves as the official, legally binding record of ownership. Token holders receive full legal rights to the underlying assets, which comprise an actively managed portfolio of short-duration government and corporate bonds.
Most existing tokenised funds rely on a 'digital twin' model: legal ownership is recorded in a traditional ledger and merely mirrored on a blockchain, leaving token holders without direct exposure to the underlying assets. BAGEY eliminates that intermediary layer entirely.
Why it matters
Tokenisation converts conventional investment products into blockchain-based digital tokens that represent direct ownership stakes. Proponents highlight benefits including 24/7 instant settlement and broader investor access through fractional ownership — features that traditional fund structures cannot replicate.
The approval signals that Hong Kong's regulatory framework is evolving to accommodate genuinely on-chain financial products, not just blockchain-adjacent wrappers. The SFC's circular on tokenisation, issued in November 2023, did not prohibit the issuance of such products, effectively leaving the door open for this development. The SFC did not immediately respond to a request for comment on the latest approval.
The competitive backdrop
Hong Kong is directly competing with the United States, where tokenised funds have recorded rapid growth in recent years. Global asset managers including Franklin Templeton and BlackRock have already launched tokenised fund products in other jurisdictions, intensifying pressure on Hong Kong to offer a comparably advanced regulatory environment.
The city's financial regulators, including the Hong Kong Monetary Authority, have consistently framed digital-asset infrastructure as central to Hong Kong's ambition to remain a leading Asian financial hub. The BAGEY approval is the most concrete regulatory endorsement of that strategy to date.
Access and eligibility
The fund is open to professional investors, according to the company. The use of a public blockchain — with networks such as Ethereum and Solana among the infrastructure options discussed in the broader tokenisation ecosystem — enables settlement and ownership transfers without reliance on traditional custodial intermediaries.
What's next
With the SFC having cleared the path for digitally native structures, other global fund managers operating in Hong Kong are likely to evaluate similar product launches. The key question now is whether Hong Kong can attract sufficient institutional capital to its on-chain fund ecosystem before US-based competitors entrench their lead — and whether regulators will extend access beyond professional investors to a broader retail base.
Point of View
A step most Western regulators have avoided. This fits a broader pattern of Hong Kong using crypto-finance liberalisation as a geopolitical differentiator from both mainland China's restrictions and the US's historically fragmented crypto rulebook. What mainstream coverage underplays is the structural significance: moving from 'digital twin' to 'digitally native' collapses the custodial layer, which has direct implications for settlement risk, cost structures, and the role of traditional prime brokers. The fund managers most exposed to disruption are those whose business models depend on that intermediary layer persisting.
NationPress
15 Jul 2026
Frequently Asked Questions
What is the Baillie Gifford Enhanced Yield Fund (BAGEY)?
The Baillie Gifford Enhanced Yield Fund (BAGEY) is Hong Kong 's first digitally native tokenised fund, approved by the Securities and Futures Commission on 15 July 2026 . It is an actively managed portfolio of short-duration government and corporate bonds where the public blockchain serves as the legal record of ownership.
What does 'digitally native' mean for a tokenised fund?
A digitally native tokenised fund uses the public blockchain as the official, legally binding ownership record — not just a mirror of a traditional ledger. This gives token holders full legal rights to the underlying assets, unlike 'digital twin' funds where the blockchain is secondary to a conventional register.
Why is this approval significant for Hong Kong?
The approval positions Hong Kong as a direct competitor to the United States in tokenised finance, where firms like BlackRock and Franklin Templeton have already launched similar products. It demonstrates that Hong Kong 's regulatory framework can accommodate genuinely on-chain financial products with full legal standing.
Who can invest in the BAGEY tokenised fund?
The BAGEY fund is currently open to professional investors, according to Baillie Gifford . The use of a public blockchain infrastructure enables fractional ownership and 24/7 instant settlement, features that could eventually support broader investor access.
How does Hong Kong's tokenisation regulation compare to the US?
Hong Kong 's SFC issued a tokenisation circular in November 2023 that did not prohibit digitally native fund structures, creating a permissive pathway that the US has not yet matched at a federal level. The BAGEY approval is the first tangible product to emerge from that regulatory openness, giving Hong Kong a first-mover advantage in this specific fund structure.
