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Swiss financial institution UBS introduces a tokenized money market fund utilizing the Ethereum blockchain.
UBS, a prominent Swiss bank, has initiated a live pilot for a tokenized variant of its Variable Capital Company (VCC) fund as part of Project Guardian, an initiative spearheaded by Singapore’s central bank.
In a press release, UBS Asset Management revealed that the fund is included in a broader VCC framework aimed at integrating various types of real-world assets (RWA) onto the blockchain. Thomas Kaegi, the head of UBS Asset Management for Singapore and Southeast Asia, noted that this project marks a significant step in the exploration of fund tokenization. Kaegi stated:
“Through this exploratory initiative, we will collaborate with traditional financial institutions and fintech providers to enhance our understanding of how to improve market liquidity and access for clients.”
UBS Asset Management has rolled out the controlled pilot of the tokenized money market fund via the firm’s proprietary tokenization service known as UBS Tokenize. Utilizing a smart contract on Ethereum, the company executed various operations including redemptions and fund subscriptions.
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This pilot also aligns with the firm’s global distributed ledger technology (DLT) strategy, which emphasizes the use of both private and public blockchains to improve fund distribution and issuance.
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This new development aligns with earlier forecasts regarding the tokenization of RWAs. During a panel discussion at the World Token Summit 2023, UAE government adviser Ellis Wang informed Cointelegraph that the tokenization of real-world assets offers various benefits such as transparency and security, which are inherent features of blockchains. The executive suggested that the tokenization of RWAs could gain traction, as it presents substantial opportunities across multiple industries.
Earlier this year, protocols centered on RWAs gained significant attention as they outperformed other sectors within decentralized finance (DeFi). On June 9, the token value of an RWA tokenization platform project increased by as much as 32% year-to-date (YTD) at that time.
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