UBS pilots tokenised money market transfers on public blockchains

0 0

By Matthew Griffin Connected Society 9th September 2023

WHY THIS MATTERS IN BRIEF

In the future all assets could be tokenised representing up to $64 Trillion of new business opportunity.

Love the Exponential Future? Join our XPotential Community, future proof yourself with courses from XPotential University, read about exponential tech and trends, connect, watch a keynote, or browse my blog.

UBS Asset Management issued a pilot tokenized money market fund on the Ethereum public blockchain. It is one of the controlled pilots that are part of the Monetary Authority of Singapore (MAS) Project Guardian.

Tokenised gold surpasses $1 Billion in market cap for the first time

“This is a key milestone in understanding the tokenization of funds, building on UBS’s expertise in tokenizing bonds and structured products,” Thomas Kaegi, Head of UBS Asset Management, Singapore & Southeast Asia. “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.”

A key advantage of tokenizing funds is greater liquidity through an expanded reach. That’s where public blockchain can help. If it’s possible to reduce fund distribution costs through technology, this translates to smaller denominations for investments – so-called fractionalization – which expands the pool of investors. High net worth individuals might invest in funds previously only accessible to institutions.

SpaceX explosion sees Facebooks African internet project go up in smoke

During the first pilot transactions, UBS Asset Management executed fund subscriptions and redemption of the tokenized fund represented as a blockchain smart contract. It plans to work with more partners and explore other investment strategies in further live pilots. UBS used its own UBS Tokenize platform.

The fund is structured as a Variable Capital Company, a new Singapore corporate structure targeted at the asset management industry. PwC recently compared the VCC structure to others used by major asset management centers around the world.

The UBS Tokenize platform was used in Hong Kong for the recent Bank of China Investment (BOCI) digital structured notes for CNH 200 million ($28m). It also issued the tokenized notes on Ethereum. Late last year, UBS Wealth Management issued $50 million in blockchain debt securities. Investors included high net worth individuals in Hong Kong and Singapore via a private placement. In that case, it used a permissioned version of Ethereum.

Chinese Government orders the "immediate shutdown" of all Bitcoin exchanges, BTC balks

Closer to home, last year UBS issued its own CHF 375 million ($411m) bond via the SIX Digital Exchange (SDX), a bond listed on both SDX and SIX, even though the bond is natively digital. This was possible because SDX linked its central security depositary (CSD) to the main SIX SIS CSD. The UBS bond is also possibly the largest digital bond issued so far.

Talking about blockchain earlier this year, UBS Chair Colm Kelleher recently said, “The technology’s unstoppable. Blockchain technology will reduce huge operational friction, reduce costs and, harnessed properly, will be a very good value additive to the chain.”

Matthew Griffin / About Author

Matthew Griffin, described as “The Adviser behind the Advisers” and a “Young Kurzweil,” is the founder and CEO of the World Futures Forum and the 311 Institute, a global Futures and Deep Futures consultancy working across the next 50 years, and is an award winning futurist, and author of “Codex of the Future” series.

Regularly featured in the global media, including AP, BBC, Bloomberg, CNBC, Discovery, RT, Viacom, and WIRED, Matthew’s ability to identify, track, and explain the impacts of hundreds of revolutionary emerging technologies on global culture, industry and society, is unparalleled. Recognised for the past six years as one of the world’s foremost futurists, innovation and strategy experts Matthew is an international speaker who helps governments, investors, multi-nationals and regulators around the world envision, build and lead an inclusive, sustainable future.

A rare talent Matthew’s recent work includes mentoring Lunar XPrize teams, re-envisioning global education and training with the G20, and helping the world’s largest organisations envision and ideate the future of their products and services, industries, and countries.

Matthew's clients include three Prime Ministers and several governments, including the G7, Accenture, Aon, Bain & Co, BCG, Credit Suisse, Dell EMC, Dentons, Deloitte, E&Y, GEMS, Huawei, JPMorgan Chase, KPMG, Lego, McKinsey, PWC, Qualcomm, SAP, Samsung, Sopra Steria, T-Mobile, and many more.