Switzerland’s leading bank, UBS, has entered the blockchain arena by launching a live pilot of a tokenized version of its variable capital company (VCC) fund, as a part of Project Guardian in collaboration with Singapore’s central bank. This innovative move, as unveiled in a press release by UBS Asset Management, is part of a broader VCC initiative aimed at bringing real-world assets (RWA) into the blockchain fold.
Thomas Kaegi, Head of UBS Asset Management for Singapore and Southeast Asia, expressed the significance of the project, stating, “Through this exploratory initiative, we will work with traditional financial institutions and fintech providers to help understand how to improve market liquidity and market access for clients.”
UBS Asset Management launched the controlled pilot of the tokenized money market fund via their in-house tokenization service, UBS Tokenize. Utilizing smart contracts on the Ethereum blockchain, the firm successfully executed various activities, including redemptions and fund subscriptions.
This milestone aligns with the company’s global distributed ledger technology strategy, emphasizing the utilization of private and public blockchains to enhance fund distribution and issuance.
The development solidifies earlier speculations about the tokenization of RWAs, as predicted during a panel discussion at the World Token Summit 2023. Ellis Wang, an adviser to the United Arab Emirates government, noted the advantages of tokenizing RWAs, such as transparency and security, inherent to blockchain technology. Wang believes that tokenization of RWAs has the potential to revolutionize multiple industries.
In recent times, protocols focusing on RWAs have gained substantial attention, surpassing other decentralized finance subsectors. Notably, on June 9, RWA tokenization platform Centrifuge experienced an impressive 32% year-to-date token gain, reinforcing the potential of this emerging trend in the financial sector.