Baillie Gifford Launches Native Tokenized Fund on Ethereum and Solana, Redefining UK Regulated Ownership Records

A UK-based investment manager managing £286 billion ($377B) in assets is pioneering a novel approach to tokenized fund ownership through BAGEY. This initiative uses public blockchains like Ethereum and Solana to create a real-time, legally binding record of fund ownership.

This represents a paradigm shift in fund administration. Unlike traditional tokenized fund models that merely wrap conventional assets in blockchain technology, BAGEY’s design integrates the blockchain itself as part of the legal ownership framework. The on-chain record becomes a core component of the fund’s governance and transfer processes.

Baillie Gifford’s approach frames tokenization as an operational upgrade rather than a marketing feature. By anchoring ownership records on public chains, the system aims to improve settlement speed, transparency, and accessibility while maintaining compliance with UK financial regulations.

Key participants in this ecosystem include BNY Mellon providing tokenization infrastructure, NatWest Trustee and Depositary Services handling depositary functions, and the fund operating under a regulated OEIC (Open-Ended Investment Company) structure. This collaborative framework demonstrates how traditional finance and blockchain can coexist within regulated parameters.

Tokenization Redefines Ownership Records

The core innovation lies in native issuance – the fund’s tokens exist solely on blockchain ledgers without off-chain counterparts. This contrasts with wrapper models where blockchain records only complement traditional ownership databases.

Here, the blockchain isn’t just a tool for distribution; it becomes the definitive proof of ownership. This requires reengineering traditional fund management roles: administrators, custodians, and transfer agents must coordinate around a shared ledger rather than isolated systems that eventually synchronize.

Maibell Gifford emphasizes that this model raises critical questions about operational viability: Can legal frameworks, custody controls, and recovery mechanisms function effectively in a production environment? The company acknowledges these challenges but positions BAGEY as a foundational test case.

Regulatory Momentum in the UK

The UK Financial Conduct Authority’s recent guidelines (PS26/7) provide a legal pathway for tokenized funds within existing authorization frameworks. BAGEY operates under this regulatory scaffold, demonstrating that blockchain-based ownership records can comply with UK standards.

This aligns with earlier developments in the UK, where the FCA approved tokenization experiments involving Chainlink, Swift, and UBS. However, BAGEY stands out by combining regulatory compliance with a full native tokenized fund structure, rather than isolated use cases.

Unlike previous tokenized fund pilots that focused on specific workflows like redemptions or subscriptions, BAGEY’s ambition is broader. It seeks to prove that public-chain records can serve as legally authoritative ownership traces, potentially transforming how fund administrators operate globally.

Operational Challenges Ahead

While BAGEY demonstrates technical feasibility, its long-term success depends on solving operational complexities. The fund must prove that blockchain-based ownership records can withstand real-world stress tests: handling failed transfers, sanction compliance, wallet recovery, and real-time liquidity management.

The industry’s $100+ trillion asset management sector needs evidence that tokenized funds can function beyond issuance and redemption. Will token holders be able to trade freely 24/7? Can tokens serve as widely accepted collateral? Can institutions trust the blockchain record during crises?

Baillie Gifford acknowledges these questions won’t be answered by the initial launch. Instead, BAGEY establishes a roadmap: if the on-chain ownership model proves operationally sound, traditional fund administrators may need to reimagine their entire technology stack around public-chain infrastructure.

For now, this initiative marks a critical inflection point. It shifts tokenization from a distribution tool to a potential foundation for the future of regulated fund ownership – one where blockchain isn’t an add-on but the core infrastructure for verifying who owns what.