Swift, UBS e Chainlink: new pilot project for the tokenization of funds and the integration of blockchain and traditional finance

Swift, UBS e Chainlink launch a pilot project for the tokenization of funds, integrating blockchain into the traditional financial infrastructure to reduce costs and improve efficiency and transparency.

Let’s see all the details in this article. 

Tokenization to improve fund management, the union of Swift, UBS, and Chainlink

As part of the Guardian project promoted by the Monetary Authority of Singapore (MAS), Swift, UBS Asset Management, and Chainlink recently completed an innovative pilot project for the settlement of tokenized funds. 

This project aims to revolutionize the traditional finance sector by integrating blockchain technology with existing processes. Thus simplifying the management and transfer of funds and significantly reducing operational costs.

Tokenization represents one of the most promising innovations in the financial sector, with the potential to transform the way investments are managed and traded. 

Thanks to tokenization, it is possible to represent a traditional asset in digital form, allowing its exchange and management on a blockchain.

This approach offers numerous advantages, including greater transparency, speed in transactions, and reduction of manual steps.

Swift, a global giant in financial messaging that connects over 11,500 institutions worldwide, has initiated a collaboration with UBS and Chainlink to apply this technology to the world of tokenized funds. 

The goal is ambitious: to integrate the blockchain with existing fiat payment systems. All this in order to create a hybrid infrastructure that can benefit from the potential of digital without giving up the guarantees and reliability of traditional systems.

One of the distinctive elements of this pilot project is the hybrid approach to payments. Unlike other tokenization solutions, which require the exclusive use of on-chain payments, this project also allows off-chain payments.

In other words, the transactions occur without the need to go through a blockchain for the payment. Thus allowing greater flexibility and reducing the barriers to adoption for financial operators.

Sergey Nazarov, co-founder of Chainlink, emphasized how this system is intended to increase the flow of capital, making financial processes more streamlined and less costly. 

In a recent statement at the Sibos conference, organized by Swift, Nazarov expressed his enthusiasm for the integration of “off-chain payment functionalities”. 

In particular highlighting how these can open new growth opportunities for the entire bull sector of digital finance.

Reduction of inefficiencies in tokenized funds

The use of blockchain for fund settlement also aims to reduce the inefficiencies that characterize traditional processes, such as refunds and subscriptions. 

These often require manual steps and long settlement times, which not only increase costs but also reduce the liquidity available for investors. 

Thanks to the Swift infrastructure, the pilot project demonstrated that it is possible to manage tokenized funds in real time, with a significant reduction in waiting times and operational costs.

The press release issued by the companies involved highlighted how this system allows for a more transparent and automated process.

The blockchain indeed allows for monitoring every phase of the transaction, making the system much more secure and accessible compared to traditional methods.

UBS, one of the largest Swiss banks, has made a fundamental contribution to this initiative. Recently, the bank launched a tokenized fund on the Ethereum blockchain, named “UBS USD Money Market Investment Fund Token” or “uMINT”.

This fund was created in response to the growing demand for tokenized financial assets, especially from institutional investors who see in the blockchain an opportunity to diversify their portfolio and increase operational efficiency.

The implementation of uMINT represents a significant step for UBS in the field of digital finance, as it demonstrates the potential of Ethereum and tokenization in improving fund management and making the money market more accessible. 

UBS has stated that the goal is to meet the needs of today’s investors. In particular, by offering them an innovative product that combines the advantages of traditional finance with the potential offered by blockchain.

The role of MAS and the future of tokenization

The Guardian project of the Monetary Authority of Singapore was designed to explore the potential of tokenization within the financial sector and promote the commercialization of tokenized assets. 

The MAS has collaborated with over 40 financial institutions. Among these are banks and technology companies, to provide guidance and useful data for the future of the sector.

During the MAS Layer One Summit, the deputy managing director, Leong Sing Chiong, emphasized the significant progress made by major institutions in the field of tokenization. 

However, Sing Chiong also highlighted the challenges still to be faced, such as the need for a support infrastructure to scale these solutions on a large scale.

According to Sing Chiong, the sector must work to overcome the current limitations and create an environment where tokenization solutions can be adopted in a massive and interconnected way. 

Only in this way will it be possible to achieve a true transformation of traditional finance. Allowing institutions to fully benefit from the blockchain without having to give up the security and stability of established systems.