Today, UBS Asset Management, the asset management division of Switzerland’s largest financial conglomerate, announced that it has launched the first live pilot of a tokenized Variable Capital Company (VCC) fund. The financial giant chose the leading altcoin Ethereum for this application. The initiative is part of the Monetary Authority of Singapore’s Project Guardian to tokenize real-world assets.
UBS launches a new application on leading altcoin Ethereum
The fund aims to enhance the city-state’s position as a center for fund management activities. Accordingly, it represents a legal entity for investment funds in Singapore, which was introduced in January 2020. The firm will launch a controlled pilot of a tokenized money market fund. For this, it will benefit from the in-house tokenization service called UBS Tokenize. This product will be in the form of a smart contract on Ethereum. It will also enable the firm to facilitate fund subscriptions and redemptions. Thomas Kaegi, President of UBS Asset Management, Singapore and Southeast Asia, made the following statement on the subject:
This is a significant milestone in understanding the tokenization of funds, building on UBS’ expertise in tokenizing bonds and structured products.
Under this initiative, UBS will collaborate with both traditional financial institutions and fintech providers, Kaegi said. The goal is to gain insight into how to increase market liquidity. Also, providing better market access for their customers.
The tokenization trend continues to gain momentum
The pilot is part of Project Guardian, the wider VCC umbrella initiative led by MAS. Project Guardian aims to tokenize various real-world assets. The Monetary Authority of Singapore (MAS) is the city-state’s financial watchdog and central bank. Variable Capital Companies (VCC) are an alternative corporate structure to limited partnerships, trust structures, and others. The choice of the leading altcoin Ethereum in tokenization is not surprising.
Tokenization of real-world assets is the process of converting ownership or rights to physical assets into digital tokens on a Blockchain or distributed ledger. This approach uses Blockchain technology to convert tangible assets such as real estate, artwork, stocks or commodities into digital tokens that can be conveniently bought, sold and traded on a Blockchain.
UBS joins the tokenization wave
The financial regulator’s previous efforts in the blockchain space have included exploring potential decentralized finance (DeFi) applications in wholesale funding markets. To this end, in November 2022, JP Morgan Onyx, DBS and SBI Digital Asset conducted trials for foreign exchange transactions and government bond trades using modified public lending protocol Aave and decentralized exchange (DEX) Uniswap on the Polygon Blockchain.
The UBS Tokenize platform was also used for the recent CNH 200 million ($27.3 million) digital structured note issuance by Bank of China Investment (BOCI) in Hong Kong. These tokenized securities were created and issued on the leading altcoin Ethereum. Towards the end of last year, UBS launched the world’s first publicly traded digital bond.
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