A major global fund manager UBS Asset Management is taking a dip into the world of blockchain technology. They have just launched their first live pilot test for a tokenized fund. The so-called Variable Capital Company (VCC) fund will be tested using UBS’s in-house tokenization service called “USB Tokenize.”
The interesting aspect to note here is that they are using smart contracts on the Ethereum public blockchain. This means that all fund activities including subscriptions and redemptions will be recorded on the blockchain in a way that can’t be changed. This will make it transparent for everyone.
Thomas Kaegi, the Head of UBS Asset Management in Singapore and Southeast Asia, says this is a big step in understanding how to use blockchain for funds. UBS already has experience tokenizing bonds and structured products and now they want to explore how this can improve market liquidity as well as access for their clients.
This initiative aligns with the broader strategy of UBS to harness blockchain technology for more efficient fund issuance and distribution. Additionally, it is diving into a larger effort spearheaded by the Monetary Authority of Singapore (MAS) aimed at digitizing real-world assets on the blockchain.
UBS has been actively involved in blockchain projects. They launched the first publicly traded digital bond in November 2022 and issued a $50 million tokenized fixed-rate note thereafter, a month later. They helped a Chinese bank issue a tokenized security in Hong Kong. Now, after this pilot, they are planning to do more with Project Guardian and collaborate with more partners to explore new investment strategies.
In brief, UBS Asset Management is embracing blockchain technology to make fund management more efficient and accessible for their clients. Moreover, they are not stopping here.