UBS Asset Management has commenced its first live pilot of a tokenized Variable Capital Company (VCC) fund, embracing the growing trend of asset tokenization. The tokenized fund is part of the Monetary Authority of Singapore’s (MAS) Project Guardian, which seeks to tokenize real-world assets.
The tokenized VCC fund represents a legal entity for investment funds introduced in Singapore in January 2020, aiming to enhance the city-state’s status as a hub for fund management activities. UBS Asset Management will utilize its in-house tokenization service, UBS Tokenize, to conduct a controlled pilot of a tokenized money market fund. This fund is structured as a smart contract on the Ethereum blockchain and facilitates fund subscriptions and redemptions.
Thomas Kaegi, Head of UBS Asset Management, Singapore and Southeast Asia, emphasized the significance of this initiative, stating that it marks a pivotal step in comprehending the tokenization of funds. He highlighted UBS’s expertise in tokenizing bonds and structured products, noting that the collaboration within this initiative will involve traditional financial institutions and fintech providers. The primary objective is to gain insights into enhancing market liquidity and improving market access for clients.
The tokenization pilot is part of Project Guardian, a broader initiative led by the Monetary Authority of Singapore (MAS) to tokenize various real-world assets. Variable Capital Companies (VCC) are an alternative corporate structure introduced by MAS, offering flexibility for investment funds in Singapore.
Asset tokenization involves the conversion of ownership or rights to physical assets into digital tokens on a blockchain or distributed ledger. This process leverages blockchain technology to transform tangible assets such as real estate, artwork, stocks, or commodities into digital tokens, facilitating their purchase, sale, and trade on a blockchain network.
