UBS expands tokenization horizons with Ethereum-based money market fund

UBS expands tokenization horizons with Ethereum-based money market fund

UBS expands its blockchain-based Project Guardian initiative to enhance market liquidity and accessibility.

Major global fund manager UBS Asset Management has launched the first "live pilot" of a tokenized money market fund on the Ethereum blockchain. UBS is using its proprietary service UBS Tokenize to explore chains such as subscriptions and redemptions. On the process.

Through this pilot program, UBS Asset Management aims to conduct various fund-related activities on the blockchain, including subscriptions and redemptions. Thomas Kaegi, head of Singapore and Southeast Asia at UBS Asset Management, sees the move as a key step in unlocking the potential of tokenizing a wide range of financial assets beyond bonds.

UBS expands tokenization efforts

UBS said the development is part of the wider Guardian Programme, which is overseen by the Monetary Authority of Singapore. The money market fund is structured as a Variable Capital Company (VCC), which represents a novel legal framework in Singapore’s investment landscape.

Following the successful execution of the initial transaction, UBS Asset Management plans to expand the scope of the program by working with a more diverse group of financial entities and exploring various investment strategies.

UBS has a track record of involvement in blockchain technology. In November 2022, the financial institution made headlines when it launched the world's first digital bond that can be traded and settled on both traditional and blockchain platforms.

Additionally, in December of the same year, the company achieved another milestone by issuing $50 million worth of tokenized fixed-rate notes. On this basis, in June, UBS continued its blockchain business and issued fully digital structured notes worth RMB 200 million for third-party issuers.

UBS explores the future of finance

The Ethereum-based pilot marks a major milestone in UBS’s push into blockchain-based financial instruments. It serves the dual purpose of not only providing UBS with valuable experience, but also helping the industry understand how blockchain can enhance market liquidity and client accessibility.

The pilot project comes at a time when the global financial industry is excited about the potential products of blockchain and tokenization. While UBS's experiment is technically just a pilot, it's more than just a trial. It provides a blueprint for how traditional financial entities can combine their established practices with the transformative power of blockchain technology.

UBS Group Chairman Colm Kelleher commented on blockchain earlier this year, emphasizing its unstoppable nature. He said that blockchain technology has the potential to significantly reduce operational barriers and costs, and if used effectively, can be a very valuable addition to the financial ecosystem.