Prominent Swiss bank UBS has unveiled its inaugural live test of a tokenized Variable Capital Company (VCC) fund on the Ethereum blockchain in Singapore.
From the official press statement, the bank conveyed that this money market fund is merely a segment of a broader VCC structure designed to bring various tangible assets onto the blockchain.
This pilot by UBS falls under the umbrella of Project Guardian, a joint industry endeavor focused on tokenizing physical assets. The initiative is supervised by the Monetary Authority of Singapore (MAS), the central bank and primary financial overseer of the city-state.
The VCC fund acts as a legal framework for investment funds in Singapore. This structure was first launched in January 2020 to bolster Singapore’s reputation as a prime location for fund management activities.
Thomas Kaegi, who leads UBS Asset Management in Singapore and Southeast Asia, emphasized that the launch of the live VCC tokenization represents a pivotal step in understanding fund tokenization.
Kaegi further accentuated the company’s dedication to collaborate with both conventional financial entities and innovative fintech players to increase accessibility in the market for investors.
These synergies aim to offer deeper insights on optimizing market liquidity for their clientele.
As per the announcement, the asset management giant introduced this controlled pilot of the tokenized money market fund via its proprietary tokenization platform named ‘UBS Tokenize.’
By leveraging smart contracts on the Ethereum public blockchain, this live experiment facilitates the bank to handle various operations, including fund subscriptions and redemptions.
UBS’s Entry Into the Tokenization Space May Propel More Growth
After the triumphant launch of UBS’s pilot transactions, the asset management company is poised to broaden its services under Project Guardian and delve into collaborations spanning a variety of investment approaches.
The company has already made notable advancements in examining the potential applications of decentralized finance (DeFi) via tokenization mechanisms.
On November 3, UBS pioneered the release of the world’s inaugural digital bond for public market trading. This groundbreaking move was soon succeeded by the launch of a $50 million tokenized fixed-rate note in December.
On June 9, the UBS Tokenize platform played a pivotal role in Hong Kong when the Bank of China Investment (BOCI) utilized it to issue digital structured notes worth CNH 200 million ($27.3M).
These tokenized notes were innovatively crafted and anchored on the Ethereum blockchain.
Though in its nascent stages, the UBS tokenization service, along with the VCC fund, hold the potential to redefine the digital asset realm and significantly influence the overarching financial ecosystem in the near future.