UK-based asset manager Baillie Gifford has launched a tokenized fund that leverages the Ethereum and Solana blockchains to manage on-chain legal ownership records for UK-regulated bond funds. The move shows increasing institutional interest in blockchain-based asset management beyond cryptocurrencies.
How a tokenized fund works
The fund is regulated in the UK and uses tokenization to record ownership of shares on the Ethereum and Solana networks. This may enable more efficient transfer and settlement of fund shares, reduce administrative costs, and increase transparency for investors. With over £200bn of assets under management, Baillie Gifford was one of the first major traditional asset managers to adopt dual blockchain infrastructure for its regulated fund products.
Why Ethereum and Solana were chosen
Ethereum was chosen for its established smart contract ecosystem and wide institutional adoption, while Solana offers higher transaction throughput and lower fees. By using both networks, Baillie Gifford aims to balance security, scalability, and cost efficiency. While the fund’s legal ownership records remain on-chain, the underlying assets, such as UK government bonds and corporate bonds, are held off-chain in traditional vaults.
Implications for institutional implementation
This launch is an important milestone for the tokenization of real-world assets. Traditional asset managers have been wary of blockchain integration due to regulatory uncertainty and operational complexity. Baillie Gifford’s regulated approach could serve as a blueprint for other institutions considering tokenized funds. It also shows that blockchain networks can coexist with existing financial infrastructure rather than completely replacing it.
conclusion
Baillie Gifford’s Ethereum and Solana tokenized bond funds represent a practical step towards mainstream adoption of blockchain technology in asset management. By focusing on legal ownership records rather than the assets themselves, funds overcome regulatory requirements while benefiting from the efficiencies of blockchain. The development could accelerate similar efforts by other large asset managers.
FAQ
Q1: What is a tokenized bond fund?
Tokenized bond funds use blockchain technology to digitally record ownership of fund shares. The underlying assets, such as bonds, are held in traditional vaults, but ownership records are managed on the blockchain, increasing efficiency and transparency.
Q2: Why did Baillie Gifford choose both Ethereum and Solana?
Ethereum offers a mature smart contract ecosystem and broad institutional support, while Solana offers faster transaction speeds and lower costs. By using both networks, funds can optimize security and scalability.
Q3: Is this fund available to retail investors?
The fund is regulated in the UK, but details of specific investor eligibility have not been disclosed. It will likely initially be aimed at institutional or accredited investors, but may later be offered more broadly.
