UBS, a forerunner Swiss banking institution, has recently kick-started a live pilot of a tokenized variation of its flexible capital company (VCC) fund. This initiative forms part of a broader project known as Project Guardian, launched by the central bank of Singapore.
In a recent press statement, UBS Asset Management revealed that the novel fund serves as one component of a wider VCC umbrella. Its ambition is to usher a range of real-world assets (RWA) onto the blockchain platform. Thomas Kaegi, leading UBS Asset Management in Singapore and Southeast Asia, applauded this innovation as an important step in comprehending the dynamics of fund tokenization. “Through this groundbreaking venture, we aim to align traditional financial structures with fintech innovations to enhance market liquidity and accessibility for our clients,” Kaegi expressed.
The tokenized money market fund pilot is executed via UBS Tokenize, the in-house tokenization service at UBS Asset Management. Leveraging Ethereum’s smart contract facility, the company has conducted a variety of operations, including redemptions and fund subscriptions. This pilot is key to the company’s global agenda of integrating decentralized ledger technology into both private and public blockchains to optimize fund issuance and distribution.
This innovation aligns with prior projections on the increasing use cases of tokenized RWAs. Ellis Wang, adviser to the UAE government, speaking at the World Token Summit 2023, underscored the multitude of benefits tokenized RWAs brings. Among the benefits mentioned were enhanced transparency and security, aspects inherent within blockchain systems. As these benefits become more apparent, Wang expects the tokenization of RWAs will attract more industries seeking to capitalize on its potential.
Earlier this year, the spotlight turned to protocols targeting RWAs, as they outshone other decentralized finance subsectors. The token assets of RWA tokenization platform, Centrifuge, experienced a hefty 32% surge within the year.