Baillie Gifford, a UK-based investment manager overseeing more than £286 billion (approximately $377 billion) in assets under management, has introduced BAGEY, a tokenized fund initiative that explores a new approach to regulated fund ownership. Unlike conventional tokenized funds that primarily use blockchain for distribution while maintaining ownership records within traditional systems, the new model incorporates public blockchains directly into the legal ownership register of a regulated UK investment fund.
The initiative represents a notable step in the evolution of fund tokenization by shifting the focus from simply providing blockchain-based access to transforming the underlying administrative infrastructure that records investor ownership.
Native Ownership Records on Public Blockchains
BAGEY is designed as a fully native tokenized UK-regulated fund, with legal ownership records maintained on public blockchains rather than existing solely within conventional financial databases. According to Baillie Gifford’s framework, investors’ holdings are recorded directly through blockchain-based tokens, making the distributed ledger part of the official ownership register instead of serving merely as a digital representation of an off-chain asset.
The fund operates through a UK-regulated Open-Ended Investment Company (OEIC) structure and issues tokenized units on both Ethereum and Solana blockchains. BNY provides the tokenization platform and wallet infrastructure, while NatWest Trustee and Depositary Services serves as the fund’s depositary, ensuring that the regulated investment structure maintains the oversight and investor protections required under UK financial regulations.
This model differs significantly from blockchain-wrapped investment products, where tokens simply mirror ownership that is officially recorded elsewhere. In BAGEY’s case, the blockchain itself becomes part of the legal framework documenting investor ownership, potentially streamlining fund administration and settlement processes.
Regulatory Framework Supports Innovation
The initiative follows recent regulatory developments in the United Kingdom. On April 30, the Financial Conduct Authority released Policy Statement PS26/7, outlining how authorized fund managers may incorporate distributed ledger technology into regulated investment funds while operating within the country’s existing regulatory framework.
The policy also addressed tokenized fund structures and distributed ledger-based investor registers, providing legal clarity for firms seeking to modernize fund administration through blockchain technology. BAGEY is viewed as one of the first major implementations aligned with this regulatory direction, demonstrating how traditional asset managers can integrate public blockchain infrastructure into regulated investment products.
Beyond Tokenized Distribution
Rather than focusing solely on blockchain-based distribution, the project seeks to modernize fund administration by making public blockchain infrastructure an integral component of the legal ownership record. If successfully adopted, this approach could improve operational efficiency, settlement processes, ownership transparency, and investor access.
However, the model remains in its early stages, and several operational questions still require practical validation. Industry observers continue to monitor whether the fund will support secondary market transfers, around-the-clock settlement, broader collateral applications, and seamless movement between approved investors under real-world conditions.
The initiative also raises important considerations regarding legal enforceability, wallet management, sanctions compliance, investor eligibility controls, redemption procedures, and the handling of failed or mistaken transfers. These operational safeguards will play a significant role in determining whether blockchain-based ownership records can eventually replace traditional fund administration systems on a larger scale.
A New Direction for Asset Management
Baillie Gifford‘s broader digital asset strategy views tokenization as a means to improve ownership records, settlement efficiency, client accessibility, and operational outcomes. By utilizing shared blockchain infrastructure, investment records could become more transparent and portable while reducing reliance on fragmented reconciliation processes across multiple financial institutions.
Although BAGEY has not yet demonstrated continuous secondary trading, widespread collateral acceptance, or a complete replacement of traditional back-office operations, it represents an important real-world test of whether regulated fund ownership can be established and maintained directly on public blockchain networks.
The initiative highlights growing institutional confidence in blockchain technology while emphasizing that successful adoption will depend not only on technological innovation but also on robust governance, legal certainty, investor protection, and operational resilience. As additional implementation details emerge, the project may help determine whether native blockchain ownership records become a foundational element of future regulated investment funds or remain limited to controlled issuance environments.
