Swiss banking giant UBS has taken a bold step with the live pilot launch of a tokenized money market fund version of its Variable Capital Company (VCC) fund according to a press release. This initiative is a pivotal component of Project Guardian, an effort led by Singapore’s central bank.
Breaking Down the VCC Umbrella
The tokenized fund is just one facet of a broader VCC umbrella meticulously crafted to usher various real-world assets onto the blockchain. Thomas Kaegi, the head of UBS Asset Management for Singapore and Southeast Asia, deems this project as a significant milestone in comprehending the intricacies of funds tokenization.
Kaegi emphasizes:
“Through this exploratory initiative, we will collaborate with traditional financial institutions and fintech providers to enhance market liquidity and access for our clients.”
UBS Tokenize Takes Center Stage
UBS Asset Management executed the controlled pilot of the tokenized money market fund through its proprietary tokenization service, aptly named UBS Tokenize. Leveraging a smart contract on the Ethereum blockchain, the firm seamlessly conducted activities such as redemptions and fund subscriptions.
This pilot aligns with UBS Asset Management’s global distributed ledger technology (DLT) strategy. It focuses on harnessing both private and public blockchains to elevate fund distribution and issuance processes.
Tokenization of Real-World Assets
The recent move by UBS validates earlier predictions regarding the tokenization of real-world assets (RWAs). Speaking at the World Token Summit 2023, UAE government adviser Ellis Wang highlighted the advantages of RWAs tokenization.
He further emphasized transparency and security embedded within blockchain technology. Wang foresees substantial opportunities for various industries through the tokenization of RWAs.
Outperformance in DeFi
This development comes in the wake of RWAs gaining prominence within the decentralized finance (DeFi) landscape. Protocols focusing on RWAs have outperformed other subsectors, with token gains from an RWA tokenization platform surging by up to 32% year-to-date on June 9.
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