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Leading Swiss bank UBS has embarked on a live pilot of a tokenized version of its Variable Capital Company (VCC) fund, as part of an initiative called Project Guardian, led by Singapore's central bank.
The move, which brings real-world assets onto the blockchain, signifies a milestone in understanding fund tokenization, according to Thomas Kaegi, the head of UBS Asset Management for Singapore and Southeast Asia. Kaegi highlighted the importance of working with traditional financial institutions and fintech providers to enhance market liquidity and market access for clients.
"This is a key milestone in understanding the tokenization of funds, building on UBS’s expertise in tokenizing bonds and structured products. Through this exploratory initiative, we will work with traditional financial institutions and fintech providers to help understand how to improve market liquidity and market access for clients." shares Kaegi in an official statement.
UBS Asset Management conducted the controlled pilot of the tokenized money market fund through its in-house tokenization service, UBS Tokenize. Leveraging a smart contract on the Ethereum network, the pilot facilitated activities such as redemptions and fund subscriptions.
This development aligns with UBS Asset Management's global distributed ledger technology strategy, focused on leveraging both private and public blockchains to improve fund distribution and issuance.
This move also validates predictions regarding the tokenization of real-world assets. Ellis Wang, a government adviser from the United Arab Emirates, noted that tokenization of such assets offers advantages like transparency and security. The tokenization of real-world assets is expected to gain traction as it presents significant opportunities across various industries.
Protocols related to real-world asset tokenization have gained prominence, outperforming other decentralized finance subsectors. Earlier in June, token-related gains from the RWA tokenization platform Centrifuge had surged by 32% year-to-date, despite the firm itself being embroiled in a debt crisis.
This pilot launch follows UBS's earlier ventures into digital bonds and structured products tokenization. It forms part of UBS's broader expansion of tokenization services.
After the successful pilot transactions, UBS Asset Management plans to execute further live pilot use cases under Project Guardian, collaborating with a wider range of partners and exploring various investment strategies.
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