UBS expands Project Guardian, a blockchain-based initiative, to enhance market liquidity and accessibility.
UBS Asset Management, a major global fund management company, has initiated its inaugural “live pilot” of a tokenized money market fund on the Ethereum blockchain. UBS is leveraging its proprietary service, UBS Tokenize, to explore on-chain processes like subscriptions and redemptions.
Through this pilot program, UBS Asset Management aims to conduct various fund-related activities on the blockchain, including subscriptions and redemptions. Thomas Kaegi, the head of UBS Asset Management in Singapore and Southeast Asia, views this initiative as a crucial step in unlocking the potential of tokenizing a wide range of financial assets beyond just bonds.
UBS Expands Tokenization Efforts
UBS states that this development is part of the broader Project Guardian, an initiative overseen by the Monetary Authority of Singapore. This money market fund, structured as a variable capital company (VCC), represents a novel legal framework within Singapore’s investment landscape.
After the successful implementation of initial transactions, UBS Asset Management plans to expand the initiative’s scope by collaborating with a more diverse group of financial entities and exploring various investment strategies.
UBS has a track record of involvement in blockchain technology. In November of 2022, the financial institution made headlines by introducing the world’s first digital bond, tradable and settleable on both traditional and blockchain platforms.
Furthermore, in December of the same year, the firm achieved another milestone by issuing a tokenized fixed-rate note valued at $50 million. Building on this progress, in June, UBS continued its blockchain endeavors by creating 200 million yuan worth of entirely digital structured notes for a third-party issuer.
UBS Explores the Future of Finance
The Ethereum-based pilot marks a significant milestone in UBS’s venture into blockchain-based financial instruments. It serves a dual purpose – it not only grants UBS valuable experience but also contributes to the industry’s comprehension of how blockchain can enhance market liquidity and client accessibility.
This pilot project arrives at a juncture when the global financial industry is already buzzing with excitement over the potential offerings of blockchain and tokenization. While technically a pilot, UBS’ experiment transcends a mere trial; it serves as a blueprint for how traditional financial entities can integrate their established practices with the transformative power of blockchain technology.
UBS Chair Colm Kelleher commented on blockchain earlier this year, emphasizing its unstoppable nature. He stated that blockchain technology has the potential to reduce operational hurdles and costs significantly and, if harnessed effectively, can be a highly valuable addition to the financial ecosystem.