UBS trials tokenized money market fund on Ethereum

The asset management arm of Swiss banking giant UBS has launched a tokenized investment fund on Ethereum.

The tokenized Variable Capital Company (VCC) fund was launched as part of Singapore’s Project Guardian pilot, an initiative by the Monetary Authority of Singapore announced in May last year. UBS said it aims to carry out more pilot programs under Project Guardian.

The fund is structured as a smart contract on Ethereum and was launched using the bank’s proprietary tokenization service, UBS Tokenized, according to an announcement on Monday.

It allows UBS Asset Management to perform various functions, such as processing fund subscriptions and redemptions.

“This is a key milestone in understanding the tokenization of funds, building on UBS’s expertise in tokenizing bonds and structured products,” said Thomas Kaegi, Singapore and Southeast Asia head at UBS asset management. 

“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,” he added.

According to a recent report by the Bank of International Settlements, tokenization has the potential to significantly enhance efficiency and transparency in financial markets.

Research by Bank of America suggests that the total value of tokenized assets could represent as much as 10% of global GDP, amounting to $16.1 trillion, by the year 2030.

Companies such as Goldman Sachs, JPMorgan, Hamilton Lane and Siemens have previously announced their involvement in asset tokenization projects.

UBS first ventured into the blockchain realm in November last year, issuing a $370 million bond on SIX Digital Exchange’s private blockchain platform.

That bond was designed for regulated tokenized offerings and was also made available on the Six Swiss exchange. 

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