UBS Asset Management Launches Tokenized VCC Fund Pilot
UBS Asset Management, the asset management division of Switzerland’s largest financial holding, has announced the launch of its first live pilot of a tokenized Variable Capital Company (VCC) fund. The VCC fund is a legal entity for investment funds in Singapore aimed at enhancing the city-state’s position as a hub for fund management activities. UBS will leverage its in-house tokenization service called UBS Tokenize to conduct a controlled pilot of a tokenized money market fund using Ethereum’s smart contract. The goal is to gain insights into enhancing market liquidity and providing better market access for clients.
Project Guardian and Tokenization of Real-World Assets
The pilot is part of Project Guardian, an initiative led by the Monetary Authority of Singapore (MAS) to tokenize various real-world assets. Tokenization involves converting ownership or rights to physical assets into digital tokens on a blockchain or distributed ledger. This enables tangible assets such as real estate, artwork, stocks, or commodities to be conveniently bought, sold, and traded on a blockchain network.
UBS Joins the Tokenization Wave
UBS has been actively exploring blockchain technology and tokenization. In Hong Kong, the UBS Tokenize platform was used for the issuance of digital structured notes by Bank of China Investment. Additionally, UBS launched the world’s first publicly traded digital bond in Switzerland. However, UBS CEO Ralph Hamers has ruled out actively offering trading, custody, or lending services related to “alternative” crypto assets.
Hot Take: UBS Embraces Tokenization to Enhance Market Liquidity
UBS Asset Management’s pilot of a tokenized VCC fund represents another significant step in the adoption of tokenization. By leveraging blockchain technology, UBS aims to enhance market liquidity and provide better market access for its clients. This move aligns with the broader MAS-led initiative to tokenize real-world assets and showcases UBS’s expertise in tokenizing bonds and structured products. While UBS has shown interest in blockchain technologies, it remains cautious about cryptocurrencies and has not actively pursued trading or custody services for these assets.
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