Swiss Bank UBS Unveils Tokenized Money Market Fund on Ethereum Blockchain

UBS, a prominent Swiss bank, has made a significant stride in the realm of blockchain technology. In collaboration with Singapore’s central bank under Project Guardian, UBS has initiated a live pilot of its tokenized variable capital company (VCC) fund. This endeavor is part of a broader initiative to bring various real-world assets (RWA) onto the blockchain. Thomas Kaegi, Head of UBS Asset Management for Singapore and Southeast Asia, emphasized the project’s importance, stating that it marks a milestone in understanding fund tokenization. Kaegi explained that the initiative involves collaboration with both traditional financial institutions and fintech providers to enhance market liquidity and access for clients.

The controlled pilot of the tokenized money market fund was launched through UBS Asset Management’s in-house tokenization service, UBS Tokenize. Leveraging a smart contract on the Ethereum blockchain, the firm executed activities such as redemptions and fund subscriptions. This move aligns with UBS’s global distributed ledger technology strategy, focusing on utilizing both private and public blockchains to improve fund distribution and issuance processes.

This development validates earlier predictions regarding the tokenization of RWAs. During a panel discussion at the 2023 World Token Summit, Ellis Wang, a government adviser from the United Arab Emirates, highlighted the advantages of RWA tokenization, including enhanced transparency and security inherent in blockchain technology. Wang suggested that the tokenization of RWAs is gaining momentum, offering significant opportunities across various industries.

The rising interest in protocols centered around RWAs became evident earlier this year, as they outperformed other subsectors within decentralized finance. For instance, token gains from the RWA tokenization platform Centrifuge surged by 32% year-to-date on June 9, indicating a growing market interest in this innovative approach. UBS’s latest move signifies a broader trend toward embracing blockchain technology and exploring the potential benefits it holds for the financial industry.

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