UBS Asset Management, a giant in the global fund sector, has just commenced a live pilot of its tokenized money market fund on the Ethereum blockchain. In this venture, UBS employs its proprietary service, UBS Tokenize, to explore on-chain activities such as subscriptions and redemptions.
According to Thomas Kaegi, the head of UBS Asset Management in Singapore and Southeast Asia, this initiative stands as a significant phase in decoding the potential of tokenizing not just bonds but diverse financial assets.
Advancing under the wings of Project Guardian
Moreover, according to UBS, the development falls under the broader scope of Project Guardian, an initiative steered by the Monetary Authority of Singapore. Designed as a variable capital company (VCC), this money market fund signifies a fresh legal construct in Singapore’s investment ecosystem. Following the successful roll-out of initial transactions, UBS Asset Management aims to widen the scope, partnering with a more diverse set of financial entities and investigating multiple investment strategies.
UBS isn’t new to the world of blockchain technology. The financial institution made waves last November when it debuted the globe’s first digital bond tradeable and settleable on both traditional and blockchain platforms. Additionally, the firm marked another achievement in December of last year, issuing a tokenized fixed-rate note valued at $50 million. And that’s not all. This June, UBS furthered its blockchain foray by generating 200 million yuan of entirely digital structured notes for a third-party issuer.
Transitioning from the familiar territory of bonds to money market funds, UBS aims to comprehend the larger implications of this digital metamorphosis. Therefore, the Ethereum-based pilot represents a new chapter in UBS’s journey into the heart of blockchain-based financial instruments. The pilot serves a dual role. It not only provides UBS with invaluable experience but also contributes to the industry’s understanding of how blockchain can better market liquidity and client access.
Tokenization as a concept is hardly new. However, its applications have been widening. In simple terms, tokenization enables the transfer of off-chain assets onto a digital ledger, offering new dimensions in tracking, trading, and managing these resources. Tokenization is poised to make considerable ripples in both the digital asset arena and the broader financial infrastructure.
This pilot, consequently, arrives at a moment when the world’s financial industry is already abuzz with the possibilities that blockchain and tokenization could offer. Though a pilot in nature, UBS’s experiment is more than a mere trial; it is a blueprint for how conventional financial entities could marry their traditional practices with the potential of blockchain technology.
