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UBS tries out an Ethereum-based tokenized money market fund

The project is part of the Monetary Authority of Singapore’s broader effort to tokenize real-world assets under the name Project Guardian.

The asset management branch of the biggest financial holding in Switzerland, UBS Asset Management, has announced the commencement of its first ever live trial of a tokenized Variable Capital Company (VCC) fund. The fund is a legal organization for investment funds in Singapore, and it came into being in January 2020 as part of an initiative to strengthen Singapore’s position as a center for fund management operations.

The pilot is a component of Project Guardian, the larger umbrella program for VCCs that is being directed by the MAS and intends to tokenize a variety of real-world assets. The Monetary Authority of Singapore (MAS) serves as both the city-state’s financial watchdog and its central bank. Variable Capital Companies (VCC) are a different kind of corporate structure than limited partnerships, trust structures, and other types of corporate structures.

This is a key milestone in understanding the tokenization of funds, building on UBS’s expertise in tokenizing bonds and structured products.

Thomas Kaegi, Singapore and Southeast Asia head at UBS asset management.

UBS Asset Management said in a press statement that the fund is an outgrowth of a VCC initiative to incorporate a wide variety of RWA into the blockchain. Thomas Kaegi, regional head of UBS Asset Management for Singapore and Southeast Asia, called the experiment a watershed moment in the study of tokenization for financial assets.

Physical assets may be “tokenized,” or converted into digital tokens that can be traded on a blockchain or distributed ledger. To facilitate the buying, selling, and trading of real estate, artwork, stocks, and commodities, this method use blockchain technology to convert these assets into digital tokens.

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.

Thomas Kaegi, Singapore and Southeast Asia head at UBS asset management.

This breakthrough makes a reality of tokenization forecasts for RWAs. On a panel at the World Token Summit 2023, United Arab Emirates government advisor Ellis Wang told Cointelegraph that tokenizing RWAs had several benefits, including the inherent security and transparency of blockchain technology. The CEO thinks that tokenizing RWAs has potential to gain traction since it opens up several market options.

Tokenized money market funds employ an Ethereum smart contract to manage fund subscriptions and redemptions, and UBS plans to test one using its in-house tokenization solution, UBS Tokenize.

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