Name: Tokenisation in 15 minutes
Uploaded: 2026-05-27
Duration: 15 min
Description: Theo Golden explores how tokenisation could make digital assets easier to hold, transfer and verify, while preserving client protections.

View transcript

As with any investment, your capital may be at risk. Theo Golden (TG): Good afternoon, I’m Theo. I lead the digital assets team at Baillie Gifford. And in the next 15 minutes, I’m going to try and introduce the world of tokenisation to you. And importantly, I’m not going to do so as a slogan or a crypto-adjacent buzzword, and certainly not as a reason to abandon the investment principles that have long served our clients. But rather, I’m hoping as a means of better serving those principles. So what is tokenisation? At its simplest, tokenisation is the process of taking an asset or the ownership rights of that asset and representing it digitally as a line of code. That code takes the form of a token and is recorded on a shared ledger. And simply put, that’s just a database that is not owned or controlled by one single institution and where ownership can be verified by the participants who use it. The asset can be anything: a money market fund, a bond, an equity, a fund unit, an LP interest or eventually a much wider range of financial claims, even something as specific as a single coupon payment within a loan’s future cash flows. The important point is that tokenisation does not change the underlying asset whatsoever. What it changes is the way ownership of that asset is recorded, transferred and used. By turning an asset into code, what have we done? Well, most importantly, we redefined the record of ownership. Today, much of the financial system runs on layers of ledgers, fund administrator records, custodian records, transfer agency records, you name it. Each works, but reconciliation between them takes time, cost and operational risk. That is often manual, and where it has been able to be automated, it has been done through a consolidation of counterparty risk. So, what if ownership could be shared, updated and verified closer to real time, but with lower counterparty risk? That’s a question that tokenisation and blockchain technology can answer. The blockchain itself becomes the ownership record. One that participants can independently inspect and verify, with each transaction cryptographically signed, timestamped and added to the chain. It’s a tamper-resistant history. In very practical terms, that means that participants, the participants in this room, do not simply take somebody else’s spreadsheet on trust. They can verify the record for themselves. And that’s where safety comes in. The blockchain becomes a common, auditable source of truth: who owned what, when it was moved and the rules that it did so under. The second change is settlement. In traditional markets, a transaction and its final settlement are usually separate events. We trade, and then we settle. Tokenisation can compress that gap. In some settings, transfer of the asset and cash can be near-simultaneous, known as atomic. If done correctly, this can reduce risk, free up capital and make ownership faster and more reliable. The third change is probably the most important: programmability. This is where tokenisation becomes more than just a digital wrapper, but rules can be embedded into the asset or the market infrastructure around it. Embedded in code: eligibility rules, transfer restrictions, collateral rules, corporate actions. The Bank for International Settlements has described tokenisation as having significant potential when that money line and the asset part can sit on shared infrastructure. Because that allows transactions to be integrated rather than processed through disconnected silos. And so that’s the prize: an interoperable financial system, one where money, assets, ownership records and transaction logic work together rather than around each other, a world where assets are not discretely bucketed but talk to each other. And that’s why a century-old, over a century-old institution like Baillie Gifford is embracing the technology. Look, very simply, this is not the “move fast and break finance” first wave of crypto. Trust me, it’s completely different. I was there first time round. This is the adopt and improve phase, one where the worlds of traditional finance and on-chain infrastructure are not colliding, but collaborating. And that means that innovation is not happening now at the margins, but rather rebuilding core market infrastructure. That future is safer, faster and programmable. So why is a curly-haired English guy talking about it from Baillie Gifford? Well, we’re building. From the outset of our tokenisation efforts at Baillie Gifford, one principle mattered. If a fund or an asset is tokenised, it must be the same or better than the original. This phrase matters because it keeps us focused on the client outcome rather than simply the technology. We cannot and should not ask clients to accept a compromise just because the infrastructure is new. For Baillie Gifford, the standard is higher. The question should not be, can this be tokenised? The question is, does tokenisation improve the client outcome without weakening the investment proposition? Put very simply, the defining culture of my team is that our traditional book of business’s ceiling is our team’s floor. We will not cross that line for quick commercial gains at the cost of clients. It must be “same but better”. That’s the Baillie Gifford gold standard. So what does “same” look like? The investment proposition has to remain intact. The same strategy, the same governance, legal protections and seriousness about risk management. Tokenisation only earns its place at the table if it improves the experience around that proposition. Better access, faster settlement, clearer records, lower friction or greater operational resilience. Importantly, without weakening what clients came to us in the first place for, or the regulatory processes we are proud to uphold. To give you an example of that, you may have heard about a lot of tokenised funds out in the US market today. In many of those tokenised market structures, from our peers, the token is just a representation of something held and recorded elsewhere. The real ownership record still sits off-chain, meaning the complexity of the traditional system remains, and the unit itself is not legally built for on-chain markets. We can, and simply should, do better. For Baillie Gifford funds, we wanted the token to be the fund, and the fund to be the token. It’s that simple, with ownership recorded natively on chain. One share class, one record, one source of truth. And that removes layers of duplication, it improves transparency, and creates a legally robust asset. So that’s “same”. What about “better”? Sometimes people get a bit flustered around this point, so let’s take them head on. The first is friction. Fund dealing, transfer agency, settlement remains very administratively heavy because in the traditional system, a client’s money passes through a long chain of intermediaries. Dr Ian Hunt’s work in the UK talks about this being the 15 counterparties in the chain from pound sterling to product. And putting a product or a fund natively on chain can shorten that chain, sometimes by removing unnecessary intermediaries, but more often by giving the existing participants, like many of us in the room, shared digital infrastructure that is more efficient, scalable and can be automated. The prize is not tokenisation for a press release or a cosmetic wrapper. It is reducing the operational drag between client capital and investment outcome and lowering the structural cost of investing for clients. The second is collateral mobility. In modern markets, high-quality assets are not always useful where they sit. Collateral can be locked in the wrong account, trapped in the wrong wrapper or simply too slow to get where it needs to be when it’s needed. Tokenisation can change that by making ownership easier to verify, transfer and pledge. The tokenised asset carries its own proof of ownership. It uses rules-based code to move as collateral without manual checks, confirmations or reconciliations. That matters because large pools of value, fund interests, private assets, money market fund liquidity, even that, are often economically valuable, but operationally inert. The UK gilt crisis, the bond market in the UK after the 2022 mini-budget, showed the cost of that inertia. You might very well remember that our prime minister lost out in a competition to a lettuce. Now, UK strategies needed liquidity quickly and were forced into rapid bond sales, amplifying stress in the market. If tokenised money market funds had been widely accepted as transferable, high-quality collateral, some investors may have been able to meet margin calls by pledging liquid fund interests rather than selling those gilts into a falling market. And that’s the key point. Tokenisation is not about making markets more speculative, like you might imagine from the history of cryptocurrencies, but rather about making existing liquidity usable and useful at moments of market stress. The last piece is distribution and access. Tokenisation can make investment strategies easier to distribute, hold and transfer by moving the ownership record onto shared digital infrastructure rather than burying it in legacy administration. That does not mean that every asset should be available to every investor. Suitability, regulation and client protection are all increasingly important and should remain essential. But it does mean that products become easier to integrate into the platforms, wallets and digital environments where new clients want to be and exist today. Eligibility, jurisdictional rules, transfer restrictions, reporting can all be more efficiently managed in that infrastructure itself, making distribution more flexible without weakening but actually improving controls. So what does that mean in simple terms? It means that the operating model of asset management and the broader financial industry can adapt to the client and the channel rather than forcing them through the constraints of legacy infrastructure. And that’s what we mean by “same but better”. New rails that allow excellent investments to be owned without compromise. Investment excellence with less friction, greater utility and better access. So everything I’ve spoken to can happen today. So the final question in the spirit of future focus is, what does this future enable? Well, one answer would be that it creates the building blocks of asset management itself to become symbiotic, modular and more personalised. And I think there are three visions to lay out. The first is composability. Today, different asset classes and fund structures live in different worlds. You’ve got a public equity manager from Roddy, you’ve got a private equity manager from Rob. Those investments, funds, co-investments, secondaries, LP interests, they all have different market structures. They have their own processes, documents, transfer restrictions and operations. Tokenisation gives us a way to standardise those building blocks. We talk about this on the team as being something called “unitisation on steroids”. We already know how to unitise funds, but tokenisation could allow us to unitise more asset classes at far greater scale, rather than at scaled cost. And that matters especially in private markets. Imagine if private market fund interests can be represented as a standardised, programmable line of code, then liquidity can start to form at those levels, at investor level. We are able to digitally enable that on platforms. Transfers can still be permissioned and eligibility rules apply, but the process becomes less bespoke, less manual, less expensive, and more importantly, quicker and far more automated. To us at BG, that opens a very interesting possibility, a genuinely liquid public-private equity strategy. A client could hold listed equities and tokenised private funds within the same portfolio architecture. And once the assets are digital, programmable and easier to combine, the portfolio itself can become far more personalised. So instead of coming to Baillie Gifford and saying, “I want this fund exactly as it exists today,” I hope that we’ll be able to say, you’ll be able to come and say to us, “I want a strategy of the best of public stocks from BG and with these private fund characteristics.” But with these risk limits, these exclusions, this liquidity profile and this reporting, the investment philosophy remains, the long-term thinking remains, but the client experience has become more flexible. The second idea is even more radical. What happens if we just get rid of the fund structure? Today, asset management is delivered through funds because they are the best container we have. They pool capital, they hold assets, they manage subscriptions and redemptions. But some of those functions exist because the infrastructure around ownership is so heavy. Investors can increasingly hold assets directly in digital wallets, particularly as the likes of the US’s very own DTCC and NYSE tokenise their stocks. And if those assets can carry their own record, compliance rules and tokenised transaction history, then the wrapper itself loses its value. In that world, we like to say that asset management is a far more powerful function. The manager provides ideas, portfolio construction, risk management, stewardship, but the client holds the assets directly. The portfolio can update in real time. The advice is streamed continuously, but it can be hyper-personalised at scale, rather than scaled cost. In a Web2 context, you might call this “stock selection as a service”. That does not make the manager less important, nor their trusted advisers. It just makes the manager’s real value clearer. The value is no longer the wrapper. It concentrates into the judgement, the research, the ability to identify exceptional companies, optimise risk. Tokenisation could allow more of the industry’s cost base to move away from just simply trying to administer and service clients, but rather towards investment insight and the thing that truly matters, which is collaborating to achieve long-term value creation. The last idea is about market structure. And this is where tokenisation starts to create a flywheel. Once assets are on common digital rails, we have the foundational LEGO brick to build and connect on top of them. One example is identity. Today, onboarding is one of the greatest frictions in finance. A client may have to prove who they are, where their money’s come from and what risks they are eligible to take again, again and again. A tokenised ecosystem can change that. Imagine an investor with a digital passport, not a public file of personal documents, but a secure line of code showing that the relevant checks have been completed, with the documents still comfortably sat with them. The client controls their underlying data, regulated firms have what they need to verify, and the investor can move through an ecosystem digitally without starting from zero each time. That means a client could access a Baillie Gifford product, Apollo, BlackRock, whatever it is, through the same digital infrastructure without having to repeatedly onboard with each institution and without requiring a gatekeeper to get there. So when we talk about tokenisation, we should not only think about today’s fund administration and service becoming cheaper, and the investment services themselves potentially, although that matters. We should think about tokenisation as enabling a modular investment industry and a more holistic financial system. Not a world where technology replaces financial services, but one where technology strips away more of the friction around it, leaving the part that matters most: investment judgement, long-term thinking and delivering better outcomes for clients. So that’s tokenisation in 15 minutes. Thank you.   <h3>Risk Factors</h3> The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions. This communication was produced and approved in May 2026 and has not been updated subsequently. It represents views held at the time of writing and may not reflect current thinking. <h3>Potential for Profit and Loss </h3> All investment strategies have the potential for profit and loss, your or your clients’ capital may be at risk. Past performance is not a guide to future returns.  This communication contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research, but is classified as advertising under Art 68 of the Financial Services Act (‘FinSA’) and Baillie Gifford and its staff may have dealt in the investments concerned. All information is sourced from Baillie Gifford & Co and is current unless otherwise stated.  The images used in this communication are for illustrative purposes only.

Tokenisation in 15 minutes

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About the speakers

Theo Golden

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