UBS Launches Tokenized VCC Fund Pilot in Singapore

The leading Swiss bank UBS has launched a live pilot of a tokenized variant of its variable capital company (VCC) fund as part of Singapore’s central bank-led Project Guardian.

UBS Asset Management announced in a press release that the fund is part of a larger VCC umbrella designed to bring various forms of real-world assets (RWA) onto the blockchain.

According to Thomas Kaegi, the head of UBS Asset Management for Singapore and Southeast Asia, the initiative is a turning point in comprehending the tokenization of funds.

“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.”

UBS Asset Management launched the controlled pilot of the tokenized money market fund using its in-house tokenization service, UBS Tokenize, according to Kaegi.

Using an Ethereum smart contract, the company conducted various operations, including redemptions and fund subscriptions.

The pilot is also part of the company’s global distributed ledger technology strategy, which centers on enhancing fund distribution and issuance through the use of private and public blockchains.

The new development validates earlier forecasts regarding the tokenization of RWAs.

Ellis Wang, a government adviser for the United Arab Emirates said during a panel discussion at the World Token Summit 2023 that the tokenization of RWAs provides numerous benefits, including blockchain-based transparency and security.

According to the executive, the tokenization of RWAs may gain traction as it presents numerous industries with significant opportunities.

Protocols concentrating on RWAs became a popular topic earlier this year as they outperformed other subsectors of decentralized finance.

On June 9, Centrifuge’s RWA tokenization platform’s year-to-date token gains increased by 32%.