UBS Completes Pilot of Blockchain Solution for Tokenized Assets
Asset management company UBS has announced that it has completed the pilot trial of a blockchain solution that will help financial institutions streamline their service offering around tokenized assets. The Switzerland-based company currently has a market capitalization of over $104.3 billion (approximately Rs. 8.8 trillion). UBS dug deeper into blockchain use cases and partnered with Chainlink and the Swift Network to conduct the pilot trials.
The solution tested by Chainlink, Swift and UBS is the ‘Digital Subscription and Redemption System’ for tokenized funds. Chainlink is a decentralized blockchain network that connects off-chain data to smart contracts, while the Swift Network is a secure messaging platform used by financial institutions.
Elaborating on the development, Swift stated that the solution was created as part of Project Guardian, overseen by the Monetary Authority of Singapore (MAS).
“The new pilot shows how financial institutions can facilitate off-chain cash settlements for tokenized funds. This initiative would enable digital asset transactions to be settled using fiat payment systems at more than 11,500 financial institutions, spanning more than 200 countries and territories,” the statement said.
According to one report The role of The Paypers, Chainlink and Swift in the pilot was to demonstrate how blockchain can improve the redemption and subscription processes for tokenized funds.
The UBS started the process to create this solution after identifying certain inefficiencies that prevail in traditional financial operations. These setbacks include delayed settlements, a lack of real-time transparency and manual interventions.
“Financial institutions can use blockchain technology, the Chainlink platform and the Swift network to settle subscriptions and redemptions for tokenized investment fund vehicles, allowing the direct processing of the payment part without the need for the global adoption of an online -chain system. form of payment. This helps automate the entire lifecycle of the fund purchasing and subscription process,” Swift’s statement said.
Understanding Blockchain and Tokenized Funds
Blockchain networks store data and information in a cluster of small packets instead of keeping data on a single server. This makes the data better protected against hacks, which improves security in the fintech sector. Furthermore, information logged into blockchain networks is stored permanently and cannot be changed. Major financial institutions such as JPMorgan, Mastercard and Standard Chartered, among others, are also exploring the use of blockchain in areas such as asset tokenization.
The process of creating digital units of a physical or virtual asset held on blockchain networks is known as asset tokenization. Tokenizing an asset can increase the liquidity of the asset. Tokenized assets allow owners to quickly raise capital by issuing tokens on a blockchain, allowing others to buy and trade them on various exchanges.
