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Xinmei Shen

Richard Chen

Hong Kong has approved its first “digitally native” tokenised fund, allowing professional investors to hold direct ownership of the underlying assets on a public blockchain, issuer Baillie Gifford says, as the city steps up its challenge to the US as a global crypto hub.
The British fund manager said on Wednesday it had received approval from the Securities and Futures Commission to launch the Baillie Gifford Enhanced Yield Fund (BAGEY) – an actively managed portfolio of short-duration government and corporate bonds.
However, the SFC told the South China Morning Post that it would not offer comment on individual cases.
Tokenisation turns traditional investment products into blockchain-based digital tokens that represent their ownership. Proponents of the technology tout its benefits including 24/7 instant settlement and wider investor access through fractional ownership.
Most tokenised funds currently use a so-called “digital twin” model, which records legal ownership in a traditional ledger and mirrors the holdings on a blockchain. This means the tokens do not provide investors with direct exposure to the underlying assets.
In contrast, “digitally native” tokenised funds such as BAGEY use the public blockchain as the official record of ownership, giving token holders full legal rights to the underlying assets.
The SFC’s circular on tokenisation issued in November 2023 did not prohibit the issuance of such products.
Hong Kong is competing with the US in the sector, where tokenised funds are seeing rapid growth.
In May, US fund giant BlackRock filed for two tokenised money market funds issued directly on the Ethereum blockchain.
Similarly, Franklin Templeton operates Benji, a digitally native token for its Franklin OnChain US Government Money Fund. The fund had been made available to professional investors in Hong Kong, said Chetan Karkhanis, Franklin Templeton’s senior vice-president, in May.
Meanwhile, Baillie Gifford said its new US dollar-denominated BAGEY fund would run on the Ethereum and Solana blockchains. The structure allows institutional investors to trade tokens using fiat currencies or the USDC stablecoin.
The introduction of the fund comes as Hong Kong seeks to expand its global influence in the digital asset sector to establish itself as a premier hub.
Eric Yip Chee-han, SFC executive director of intermediaries, said in April that the city should “be a little bit more aspirational” on the global stage after having secured a “strong hold locally”.
The Asian financial hub finalised its regulatory framework for the digital asset industry in May after wrapping up a public consultation on a new licensing regime for firms both advising on and managing virtual assets.
SFC chief executive Julia Leung Fung-yee said the milestone marked the “final leg of our journey to complete the regulatory framework for digital assets”.
City regulators have moved to expand local digital asset product offerings even as price slumps weigh on market sentiment. Bitcoin has extended its downturn since last year, having shed nearly 50 per cent of its value since July 2025.
Despite the market chill, the Hong Kong Monetary Authority in June tapped a collective of experts from 21 financial and legal institutions to remove legal and regulatory hurdles for tokenised bonds. The initiative aims to drive blockchain-based debt issuances beyond government-led pilots and into the wider private sector.
The SFC said in April that it would allow the secondary trading of tokenised investment products authorised by the securities regulator.


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As the city looks to challenge the US as a global crypto hub, Baillie Gifford says the SFC has approved its blockchain-based tokenised fund


As the city looks to challenge the US as a global crypto hub, Baillie Gifford says the SFC has approved its blockchain-based tokenised fund.


Hong Kong steps up to US crypto fund challenge with tokenised fund approval

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}As the city looks to challenge the US as a global crypto hub, Baillie Gifford says the SFC has approved its blockchain-based tokenised fund

As the city looks to challenge the US as a global crypto hub, Baillie Gifford says the SFC has approved its blockchain-based tokenised fund