Hong Kong SFC Approves Baillie Gifford's Blockchain-Based Tokenised Fund

Hong Kong is ramping up its rivalry with the United States to establish itself as a premier global crypto center. On Wednesday, British fund manager Baillie Gifford revealed that it has secured approval from the Securities and Futures Commission (SFC) to introduce the Baillie Gifford Enhanced Yield Fund (BAGEY), which is an actively managed collection of short-duration government and corporate bonds. Unlike most tokenised funds that operate on a 'digital twin' model—where ownership is documented in a conventional ledger and replicated on a blockchain—BAGEY is a 'digitally native' tokenised fund. This approach utilizes the public blockchain as the definitive ownership record, providing token holders with complete legal rights to the assets. Tokenisation transforms traditional investment vehicles into blockchain-based digital tokens, facilitating benefits like 24/7 instant settlement and fractional ownership for broader investor participation. While the SFC did not immediately comment, its November 2023 circular regarding tokenisation did not prohibit such offerings. This approval represents a crucial advancement for Hong Kong in its quest to compete with the US in the burgeoning tokenised fund market.