UBS launches token fund pilot under Investing.com’s Project Guardian initiative in Singapore

Swiss multinational investment bank UBS Asset Management (SWX: UBSG) has launched a pilot project to tokenize a Variable Capital Company (VCC) fund in Singapore. The pilot, launched today Monday, is part of the Monetary Authority of Singapore’s (MAS) Project Guardian initiative. The bank used its own platform, UBS Tokenize, to conduct the first transactions in this pilot, which included fund subscriptions and redemptions of the tokenized fund represented as a smart contract.

The Project Guardian initiative aims to enable faster settlement, greater operational efficiency and more effective cross-border distribution of capital markets instruments on digital asset networks. UBS’s pilot project aims to improve fund distribution and enable improved secondary market trading of VCC fund shares.

Thomas Kaegi, Head of UBS Asset Management, Singapore and Southeast Asia, highlighted that UBS plans to expand its partnership network for the project and explore other investment strategies in future live pilots. Notably, UBS has shown impressive financial performance with a market capitalization of $78597.81 million and a P/E ratio of 2.29, according to InvestingPro data.

Project Guardian was announced by MAS back in May 2022 with the aim of establishing “best practices and technical standards” in the financial ecosystem. It also tests the feasibility of asset tokenization and decentralized finance (DeFi) applications while managing risks to financial stability and integrity. The Japan Financial Services Authority (FSA) joined the project in June 2023.

To date, several pilot projects have been launched under Project Guardian. One such pilot involved HSBC, Marketnode and UOB, which completed a technical test to issue and distribute a digitally native structured product. This pilot demonstrated that the structured chain of custody can enable faster issuance and fulfillment at lower costs.

Another notable pilot was completed by DBS Bank, JPMorgan and SBI Digital Asset Holdings. The organizations conducted foreign exchange and government bond transactions against liquidity pools that included tokenized Singapore government bonds, Japanese government bonds, Japanese yen (JPY), and Singapore dollars (SGD).

Project Guardian is currently piloting a repurchase agreement (repo) with locally issued digital bonds. DBS Bank, SBI Digital Asset Holdings and UBS AG are responsible for this test. UBS, a leading player in the capital markets industry, according to InvestingPro Tips, has been aggressively buying back shares, a sign of the company’s confidence in its own stocks.

In this context, UBS Group AG (SIX:UBSG) also announced the launch of a pilot project for the tokenization of money market funds. This test takes place on the UBS Tokenize platform, developed on the Ethereum blockchain. The bank believes that the tokenization of these funds will increase liquidity and attract more potential customers. As part of this project, UBS’s wealth management division successfully redeemed a tokenized fund in smart contract format and plans to onboard more contractors in the future. The company’s strong returns over the past three months, as highlighted by InvestingPro Tips, further underscores the potential success of these innovative efforts.

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