UBS Asset Management Launches First Blockchain-native Tokenized VCC Fund Pilot in Singapore

October 30, 2023

By Sharan Kaur Phillora

UBS Asset Management has taken a significant step in the blockchain domain by launching a pilot of a tokenized Variable Capital Company (VCC) fund in Singapore, marks a significant stride in financial innovation. This initiative is a part of the broader Project Guardian, spearheaded by the Monetary Authority of Singapore (MAS), aiming to tokenize real-world assets.

Here’s what we know:

Thomas Kaegi, the head of UBS Asset Management in Singapore & Southeast Asia, emphasized that this move is a crucial milestone towards understanding funds’ tokenization. This initiative builds on UBS’s prior expertise in tokenizing bonds and structured products. The primary goal is to collaborate with traditional financial institutions and fintech providers to enhance market liquidity and access for clients.

Tokenization, the process of converting real assets into digital tokens on a blockchain, is known for its potential to increase liquidity and attract more investors. By reducing the costs associated with fund distribution, it’s possible to offer investments in smaller denominations, also known as fractionalization. This feature potentially expands the pool of investors, making funds accessible to high-net-worth individuals besides traditional institutional investors.

The pilot saw the execution of fund subscriptions and redemptions of the tokenized fund represented as a smart contract. Going forward, UBS Asset Management plans to engage with more partners and delve into various investment strategies in subsequent live pilots. This pilot is one of the controlled trials under Project Guardian, which also has the backing of the Japan Financial Services Authority, hinting at a broader collaborative effort in the fintech space​.

UBS’s voyage into blockchain isn’t new; they have a history of blockchain involvement, including launching the world’s first digital bond and issuing a $50 million tokenized fixed-rate note. This pilot further illustrates UBS’s commitment to exploring blockchain’s potential in transforming the financial sector, aligning with global strides towards blockchain adoption​.

The unfolding narrative of UBS’s blockchain endeavors, especially this pilot, symbolizes a blend of traditional financial mechanisms with cutting-edge blockchain technology, marking a significant forward leap in the fintech arena.

About the author

Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.

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