A major UK investment manager with over £286 billion ($377 billion) in assets under management is testing a new approach to fund tokenization. Baillie Gifford launched a product called BAGEY, which uses public blockchains Ethereum and Solana as part of the legal ownership record for a regulated UK fund. This moves tokenization beyond simply distributing funds through blockchain channels and into the core of fund administration.
The central idea is “native issuance.” Instead of wrapping a traditional fund in a blockchain shell while keeping the main ownership record off-chain, BAGEY uses the blockchain itself as the legal register. BNY provides the tokenization and wallet infrastructure, while NatWest Trustee and Depositary Services acts as depositary. This means the fund administrator, custodian, transfer agent, and depositary all coordinate around a shared ledger, not a private database that later syncs with a token.
Regulatory backing from the UK
The UK’s Financial Conduct Authority (FCA) published policy statement PS26/7 on fund tokenization earlier this year. This gave Baillie Gifford a regulatory framework to work with. Ciondigital previously reported on this policy shift, which allowed tokenized fund models and DLT-based unitholder registers within authorized fund structures. BAGEY now puts that policy into practice with a real asset manager, fund structure, and public-chain implementation.
Previous experiments, including tests by Chainlink, Swift, and UBS, showed that traditional fund workflows could integrate with blockchain systems. BAGEY pushes further by asking whether the ownership record itself can reside on public chains, not just whether a single workflow can be automated.
What remains unproven
The launch answers one key question with a qualified yes: regulated funds can move toward legal infrastructure on public chains. But the model still needs to prove it can handle secondary transfers, around-the-clock settlement, or use as collateral outside a controlled primary market.
For asset managers, the burden of proof shifts. A tokenized wrapper can be judged on access and distribution. A native fund record must be assessed for legal finality, operational resilience, controls over eligible holders, failed transfers, wallet loss, sanctions screening, and redemption timing. These are practical back-office details that determine whether the token becomes genuinely useful beyond issuance and redemption.
The operational test ahead
BAGEY shows that a large traditional asset manager is willing to put a regulated fund on public-chain rails and call it native rather than wrapped. It also brings major service providers like BNY and NatWest into the structure. But regulated funds don’t become legal infrastructure just through a smart contract. They need oversight, reconciliation, controls, custody procedures, and investor protections that institutions can defend.
The launch doesn’t show that tokenized fund units will trade freely around the clock, become widely accepted as collateral, or replace the rest of the fund administration stack. Those outcomes require evidence of actual transfer mechanics, secondary liquidity, investor onboarding, and legal treatment under stress.
For now, BAGEY moves the discussion forward without ending it. It is a live test of whether public blockchains can carry a regulated ownership record, rather than proof they have already replaced the old fund administration stack. If the answer becomes yes, tokenization stops being mostly a packaging story and becomes a change to the plumbing behind fund ownership.
