Swift, UBS, Chainlink Aim to Tokenize Fund Settlement Times
What seems like a leap toward innovation in traditional finance, Swift, UBS Asset Management, and Chainlink have collaborated on a pilot program using a tokenized fund settlement system. This is one of the key steps that Project Guardian of the Monetary Authority of Singapore has achieved toward digitization and efficiency in the processing of transactions within funds.
On overcoming inefficiencies within the transactions of funds:
These processes are typically complicated, laborious, and hence slow, mainly around the time of subscription and redemption activities that further delay settlements and increase overall operational cost. In this pilot, Swift demonstrated that blockchain can cater for real time transactions in funds, hence smoothing processes, cost reduction and improvement of liquidity.
Utilizing Off-Chain Payment Systems
Unlike typical blockchain-based pilots, this will involve the over 11,500-strong global messaging network of financial institutions on Swift, integrating tokenized fund settlements within fiat payment systems to offer a new form of digital finance-sans exclusive blockchain-only payment solutions. Sergey Nazarov, co-founder of Chainlink, indicated the advantage of having the payment capability off-chain, which promises better capital flow in the financial ecosystem.
Shift to Tokenized Investment Funds
This pilot is part of MAS’ Project Guardian, which follows earlier work by UBS and SBI Digital Markets to design systems for digital fund subscriptions and redemptions. In July, UBS unveiled the “UBS USD Money Market Investment Fund Token” on the Ethereum blockchain to meet increasing investor demand for tokenized assets.
Vision of MAS on Tokenization at Scale
During MAS’ first-ever Layer One Summit, its Deputy Managing Director Leong Sing Chiong acknowledged tokenization’s potential, as evidenced from a string of collaborations that involves the Project Guardian. He did this while tempering this with a dose of realism-the scale would be very difficult to achieve, just like building an infrastructure to broadly support tokenized assets.
This pilot epitomizes blockchain’s potential to shape modern finance toward a future where tokenized funds create superior access to more efficient financial solutions.
