Swift, UBS Asset Management, and Chainlink joined hands to successfully complete a one-of-a-kind tokenized fund settlement pilot.
Singapore’s Project Guardian sandbox, instituted and overseen by the Monetary Authority Service (MAS), has churned out highly promising use cases, with its most recent one looking to be the most disruptive. A joint undertaking by payments infrastructure and network Swift, UBS Asset Management, and blockchain infrastructure firm Chainlink has resulted in the completion of a pilot program surrounding tokenized fund settlements.
Using Existing Fiat Systems to Settle Tokenized Funds
Settlements occur over Swift’s payment and messaging network, which services over 11,500 financial institutions. Reliance on Swift has allowed the pilot to successfully integrate blockchain-based tokenized transfers via well-established fiat Infrastructure. In a first-of-its-kind use case, this will allow tokenized fund transfers to be initiated and processed beyond the blockchain, thanks to the Swift integration.
Chainlink co-founder Sergey Nazarov foreshadowed the announcement at the Sibos conference on October 23, in which he spoke about blockchain integration with Swift.
The development of this use case will transform the redemption and subscription components of fund transfers, which are currently affected by “manual interventions, delayed settlements, and a lack of real-time transparency,” according to a release announcing the completion of the pilot. These drawbacks engender increased costs and negatively impact liquidity.
This pilot utilizes Swift to process real-time fund redemptions and subscriptions via automated fund transaction processes at low costs and high transparency. All that with a well-established and highly utilized fiat network that overcomes the need for the global adoption of a blockchain-based platform.
“Chainlink is enabling institutions to reuse Swift’s infrastructure to facilitate payments for digital asset transactions,” mentioned Sergey Nazarov. “I am very excited by the upcoming adoption of these off-chain payment capabilities and how they will increase the flow of capital and expand the possible user base of digital assets.”
“Our work with UBS Asset Management and Chainlink in MAS’ Project Guardian leverages the global Swift network to bridge digital assets with established systems,” said Jonathan Ehrenfeld, Head of Strategy at Swift.
Furthermore, the pilot is established on the already built infrastructure instituted by UBS and SBI Digital Markets for Digital Redemption and Subscription of tokenized funds. UBS also rolled out its tokenized fund on the Ethereum blockchain on November 1 to meet investors’ demands for something of this kind. The asset manager has named it “UBS USD Money Market Investment Fund Token” or “uMINT.”
