17th July 2026
By Shubhii Verma
Hong Kong Approves First Digitally Native Tokenised Fund
Hong Kong has approved its first digitally native tokenised investment fund, marking another milestone in the city’s efforts to become a leading global digital asset hub and strengthen its position against the United States in blockchain-based finance. British investment manager Baillie Gifford announced that it has received approval from Hong Kong’s Securities and Futures Commission (SFC) to launch the Baillie Gifford Enhanced Yield Fund (BAGEY), a tokenised fund designed for professional investors.
The fund will invest in a portfolio of short-duration government and corporate bonds while utilizing blockchain technology to record ownership directly on a public distributed ledger. Unlike many existing tokenised funds that rely on a “digital twin” model—where blockchain tokens merely mirror ownership recorded on traditional financial systems—BAGEY is structured as a digitally native fund. This means the blockchain serves as the official ownership register, giving investors direct legal ownership of the underlying assets.
The new fund will operate on both the Ethereum and Solana blockchains, allowing institutional investors to subscribe and trade using either traditional fiat currencies or the USDC stablecoin. Proponents of tokenisation believe this model offers significant advantages over conventional investment products, including faster settlement times, improved operational efficiency, enhanced transparency, and the potential for fractional ownership that could broaden market access over time.
Hong Kong’s approval comes as competition among global financial centers to lead the tokenisation market continues to intensify. In the United States, firms such as BlackRock and Franklin Templeton have also expanded their blockchain-based investment offerings, highlighting growing institutional interest in tokenised financial products.
Hong Kong’s Strategy to Lead Tokenised Finance
The approval reflects Hong Kong’s broader strategy of establishing itself as a premier destination for digital asset innovation. Over the past year, the city has introduced a comprehensive regulatory framework covering cryptocurrency exchanges, virtual asset service providers, stablecoins, and tokenised investment products. Regulators have repeatedly emphasized their ambition to position Hong Kong as an international hub for regulated blockchain finance.
Despite continued volatility in cryptocurrency markets, Hong Kong has maintained its focus on developing digital asset infrastructure. In recent months, the Hong Kong Monetary Authority (HKMA) assembled a working group of financial institutions and legal experts to remove barriers to tokenised bond issuance and encourage broader adoption of blockchain technology across capital markets.
The SFC has also expanded opportunities for regulated tokenised investments by permitting secondary trading of authorized tokenised products, further strengthening the city’s digital finance ecosystem.
The launch of Baillie Gifford’s tokenised fund demonstrates Hong Kong’s commitment to integrating blockchain technology into traditional financial markets. As institutional adoption of tokenisation accelerates globally, the city’s regulatory support and growing product ecosystem could help reinforce its role as one of the world’s leading centers for digital asset innovation.
