UBS Asset Management, one of the largest fund organizations in the world, has initiated the pilot program of a money market fund tokenized on the Ethereum blockchain. The pilot program of the fund, which is part of Project Guardian, is the first of several live pilot programs planned by UBS Asset Management.
Various Fund Activities to be Tested in Pilot Program
UBS Asset Management has launched the first live pilot program of a money market fund tokenized on the Ethereum blockchain. According to the company, the pilot program allows UBS Asset Management to test various fund activities on the blockchain, including subscriptions and redemptions. The company utilized the in-house tokenization service UBS Tokenize to launch the pilot program.
Thomas Kaegi, the President of UBS Asset Management in Singapore and Southeast Asia, stated, “This is a significant milestone in understanding the tokenization of funds, leveraging UBS Asset Management’s expertise in tokenizing bonds and structured products. Through this exploratory initiative, we will collaborate with traditional financial institutions and fintech providers to understand how we can improve market liquidity and market access for clients.”
UBS Asset Management has been at the forefront of testing and utilizing blockchain technology. The company launched the world’s first digital bond, which is publicly traded and traded on both blockchain-based and traditional exchanges, in November 2022. In December 2022, it issued a $50 million tokenized fixed-rate bond, and in June 2023, it issued a fully digital structured bond worth 200 million yuan for a third-party issuer.
Pilot Program is Part of Project Guardian
Furthermore, UBS Asset Management noted that its latest tokenized money market fund pilot is part of Project Guardian, a collaborative industry initiative managed by the Monetary Authority of Singapore (MAS). The fund is structured as a variable capital company (VCC), a new legal entity form for all types of investment funds in Singapore.
The company added that after the successful launch of the initial pilot transactions, it will seek to conduct more live pilot usage within the broader consortium of UBS Asset Management’s Project Guardian, exploring various investment strategies.
Tokenization, which helps bring off-chain or real-world assets onto the blockchain, is gaining popularity. The latest report by The Block Research shows that tokenization enables the tracking, trading, programmability, and management of these assets. The report highlights that tokenization has the potential to significantly reshape the digital asset industry and the global financial system.
