Originally published on: November 05, 2024
In a groundbreaking development within the Monetary Authority of Singapore’s (MAS) Project Guardian, UBS Asset Management, Swift, and blockchain oracle network Chainlink have successfully conducted a pilot for tokenized fund settlement.
This project leverages Swift’s extensive global financial messaging network, connecting more than 11,500 institutions, to streamline tokenized fund processes with existing fiat payment systems.
What sets this initiative apart from other tokenization pilots is its ability to facilitate transactions without relying solely on blockchain payment options. By integrating digital finance into the existing infrastructure, this pilot opens up new possibilities for the financial industry.
The recent Swift-organized Sibos conference on Oct. 23 saw Chainlink co-founder Sergey Nazarov discussing the potential for blockchain integration with Swift, setting the stage for this successful collaboration.
Traditional fund transactions, especially in redemptions and subscriptions, often face challenges due to manual processes and delayed settlements. These inefficiencies can lead to increased operational costs and liquidity issues. However, the pilot conducted by UBS, Swift, and Chainlink aims to address these issues by introducing a real-time fund redemption and subscription system for tokenized investment funds.
Nazarov expressed his enthusiasm for the adoption of “off-chain payment capabilities” and their potential to enhance capital flow in the financial markets.
As part of Project Guardian, UBS and SBI Digital Markets have been working on developing a Digital Subscription and Redemption system for tokenized funds. UBS recently launched a tokenized fund on the Ethereum blockchain known as the “UBS USD Money Market Investment Fund Token,” or “uMINT,” in response to the growing demand for tokenized financial assets among investors.
MAS has been actively promoting the commercialization of tokenized assets, with over 40 institutions collaborating to guide this initiative based on data from more than 15 trials. During the MAS Layer One Summit, MAS deputy managing director Leong Sing Chiong highlighted the progress made by major financial institutions participating in Project Guardian, showcasing the potential of tokenization in foreign exchange and funds.
With ongoing developments in the realm of tokenized fund settlements and blockchain integration, the financial industry is poised for transformative changes that could revolutionize the way transactions are conducted globally.
