UBS Launches Pilot of Tokenized VCC Fund on Ethereum Blockchain in Singapore
UBS, a leading Swiss asset management bank, has announced the launch of its first live pilot of a tokenized Variable Capital Company (VCC) fund on the Ethereum blockchain in Singapore. The VCC fund is part of a wider initiative to integrate real-world assets into the blockchain. This pilot is part of Project Guardian, an industry collaboration led by the Monetary Authority of Singapore (MAS).
The VCC fund was introduced in January 2020 to establish Singapore as a hub for fund management operations. UBS Asset Management sees the launch of the live VCC as a significant milestone in exploring fund tokenization and aims to partner with traditional financial institutions and fintech providers to improve market accessibility for investors and enhance liquidity.
UBS rolled out the controlled pilot of the tokenized money market fund using its in-house tokenization service called ‘UBS Tokenize.’ Through smart contracts on the Ethereum blockchain, the pilot enables various activities such as subscriptions and redemptions.
UBS’s Entry Into Tokenization Space May Drive Further Growth
Following the successful pilot transactions, UBS plans to expand its offerings under Project Guardian and engage in partnerships involving different investment strategies. The firm has already made progress in exploring decentralized finance (DeFi) use cases through tokenization services.
In November 2022, UBS launched the world’s first digital bond traded on public markets. In December, they issued a $50 million tokenized fixed-rate note. Additionally, UBS Tokenize was used in Hong Kong to issue digital structured notes by Bank of China Investment (BOCI) worth CNH 200 million ($27.3 million).
Hot Take: UBS Pioneering Tokenization for Financial Innovation
UBS’s debut of a tokenized VCC fund on the Ethereum blockchain marks a significant step forward in the adoption of blockchain technology in asset management. By leveraging smart contracts and blockchain infrastructure, UBS aims to improve market accessibility, enhance liquidity, and explore new investment opportunities. The success of their pilot transactions and collaborations under Project Guardian demonstrate UBS’s commitment to driving innovation in the financial industry. As tokenization continues to gain traction, UBS’s entry into the space positions them as a key player in shaping the future of digital assets and the broader financial system.
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