First Tokenized Fund on Ethereum - Baillie Gifford Gets Nod from FCA

First FCA-approved tokenized fund launched

Edinburgh-based Baillie Gifford has partnered with digital securities exchange Archax to launch the Strategic Bond Feeder Fund, a feeder fund linked to the firm’s 25-year-old Strategic Bond Fund.

The tokenized fund is issued as a digital asset on Ethereum, with tokens stored in a self-custodial wallet and available to a select group of clients during its pilot phase. According to the announcement, the fund complies with strict FCA regulations, ensuring transparency and compliance, while leveraging blockchain to increase operational efficiency.

The move is seen as the first step in Baillie Gifford’s efforts to modernize its investment fund infrastructure, with the aim of reducing costs, increasing transaction speed, and improving real-time auditability. UCITS funds, a popular investment vehicle in the European Union, are now being tokenized, opening up the potential for institutional investors to access digital assets in a legal and secure manner.

Tokenization Trends in Traditional Finance

The cryptocurrency market is set to peak at $3.5 trillion in 2025, while Bitcoin and Ethereum ETFs attracted more than $50 billion in institutional inflows in Q1. The trend of tokenization — converting traditional assets into digital ones on the blockchain — is becoming a focus for major financial institutions, with firms like BlackRock (which aims to have the largest crypto asset under management by 2030) and JPMorgan (which has applied for the trademark JPMD) showing strong interest in the technology.

In the UK, the FCA has been supporting the tokenization industry for many years, with developments such as a model for using distributed ledger technology (DLT) in the fund register from 2023. The launch of the Baillie Gifford tokenized fund is seen as the result of a collaboration between the FCA, the European Fund and Asset Management Association (EFAMA), and industry stakeholders, reflecting the effort to make the UK a global hub for digital finance. In this context, the Baillie Gifford fund is not only a pilot but also a potential model for future financial products.

The UK's position in digital finance

The move cements the UK’s position as a hub for financial innovation, rivaling markets like Switzerland and Singapore. With the backing of the FCA and the involvement of Baillie Gifford – a firm with a track record of investing in tech giants like Tesla and Amazon – the UK is shaping up to be a leader in asset tokenization. It also reflects a global trend, with institutions like Tether (which invested in gold mining) and SharpLink Gaming (which bought $463 million in ETH) getting into crypto.

Conclude

Baillie Gifford’s launch of the first FCA-approved tokenized fund on Ethereum, valued at $260 billion, is a dramatic step forward in the convergence of traditional finance and blockchain technology. With the potential for increased efficiency, transparency, and scalability, the fund could become a model for the future of asset management. However, regulatory and cybersecurity risks require careful consideration to ensure long-term success.

With the crypto market growing and the UK strengthening its digital finance position, this event is a testament to the power of innovation. Will this fund usher in a new era of tokenization, or is it just the beginning of a challenging period? Stay tuned for the latest developments!

Disclaimer: The information presented in this article is the author's personal opinion on the cryptocurrency field. It is not intended to be financial or investment advice. Any investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The views expressed in the article do not represent the official position of the platform. We recommend that readers conduct their own research and consult with a professional before making any investment decisions.

Compiled and analyzed by HCCVenture

Join HCCVenture here: https://linktr.ee/holdcoincventure