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