UBS Asset Management launches first blockchain-native tokenized VCC fund pilot in Singapore

By Sharan Kaur Phillora

UBS Asset Management has launched its first blockchain-native tokenized Variable Capital Company (VCC) fund pilot in Singapore, marking a pivotal step in fund tokenization. This initiative falls under the broader venture, Project Guardian, by the Monetary Authority of Singapore (MAS). The endeavor aims to transition diverse “real world assets” on-chain, enhancing market liquidity and accessibility for investors.

Here’s what we know:

The pilot leverages UBS’s proprietary tokenization service, UBS Tokenize, facilitating a controlled trial of a tokenized money market fund. This fund is a smart contract on the Ethereum public blockchain, allowing various operations, including fund subscriptions and redemptions. Thomas Kaegi, the head of UBS Asset Management in Singapore and Southeast Asia, hailed this venture as a “key milestone,” emphasizing the collaboration with traditional financial entities and fintech providers to refine market dynamics.

This tokenized fund is a constituent of a more extensive VCC framework and is a part of UBS Asset Management’s global strategy on distributed ledger technology. The strategy accentuates the utilization of public and private blockchain networks to optimize fund issuance and distribution. The pilot also augments UBS’s tokenization services spectrum offered through UBS Tokenize.

Previously, UBS has had a stint in the digital financial sphere with the launch of the world’s first publicly traded digital bond in November 2022, issuing a USD 50 million tokenized fixed rate note in December 2022, and orchestrating CNH 200 million of fully digital structured notes for a third-party issuer in June 2023.

Post the successful execution of the initial pilot transactions, UBS Asset Management aspires to broaden its horizons under Project Guardian. The next phase would involve executing more live pilot use cases in alliance with a broader spectrum of partners while delving into diverse investment strategies, thereby paving the path for a more inclusive and technologically-driven financial ecosystem.

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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