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News

Swift, UBS, Chainlink Complete Pilot for Global Tokenized Fund Settlement Network

November 5, 2024 - Around 3 mins mins to read

Key Points:

  • Swift, UBS, and Chainlink completed a pilot for settling tokenized fund settlements and redemptions, enhancing efficiency across 11,500 institutions worldwide.
  • This initiative tackles traditional inefficiencies, reduces costs, and improves liquidity in the $63 trillion mutual fund market.
  • The pilot leverages blockchain technology and existing Swift infrastructure to automate payment processes without needing on-chain payment systems.
According to the Swift website, Swift, UBS Asset Management, and Chainlink have completed a proof-of-concept that would settle tokenized fund settlements and redemptions through the Swift network.
Swift, UBS, Chainlink Complete Pilot for Global Tokenized Fund Settlement Network

Swift, UBS, and Chainlink Complete Pilot for Tokenized Fund Settlements

The tokenized fund settlements raise the ante on digital assets, bringing them closer to integration with fiat payment systems at over 11,500 financial institutions across more than 200 countries and territories.

Traditional subscription and redemption settlement in funds are prone to several inefficiencies. Among these are the possibility of manual intervention, delayed settlements, and lack of real-time transparency. These critical flaws help increase operating costs at the expense of lesser liquidity and lost opportunities across the $63 trillion global mutual fund market.

The recent pilot has shown how financial institutions can utilize blockchain technology, particularly the Chainlink platform and the Swift network, to automate subscription and redemption processes for tokenized investment fund vehicles. This enables straight-through processing of the payment leg without relying on the widespread adoption of payment methods on-chain and effectively automates the whole lifecycle of the fund’s transaction.

Read more: BlackRock Tokenized Fund Now Pushed To Hit $2 Trillion Market

Enhancing Digital Asset Transactions through Global Payment Integration

The tokenized fund settlements pilot extends earlier collaborations between UBS Asset Management and SBI Digital Markets to develop a digital subscription and redemption system for tokenized funds. It is also part of Project Guardian by the Monetary Authority of Singapore. It is an initiative supporting global collaboration between policymakers and industry leaders to foster liquidity and efficiency in capital markets through asset tokenization.

Providing an existing Swift infrastructure, it thus facilitates end-to-end payment orchestration across the settlement of fund subscriptions and redemption. The pilot was an excellent test of how Swift can bring a secure, scalable connection linking financial institutions with different blockchains. Jonathan Ehrenfeld, Head of Strategy at Swift, said that was an essential part of the global adoption of digital assets, given that it has allowed traditional payment systems to connect with digital currencies for the first time.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Chainlink

SWIFT

Tokenized Fund Settlement

Tokenized Fund Settlement Network

UBS

Author

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.
News

Swift, UBS, Chainlink Complete Pilot for Global Tokenized Fund Settlement Network

Key Points:

  • Swift, UBS, and Chainlink completed a pilot for settling tokenized fund settlements and redemptions, enhancing efficiency across 11,500 institutions worldwide.
  • This initiative tackles traditional inefficiencies, reduces costs, and improves liquidity in the $63 trillion mutual fund market.
  • The pilot leverages blockchain technology and existing Swift infrastructure to automate payment processes without needing on-chain payment systems.
According to the Swift website, Swift, UBS Asset Management, and Chainlink have completed a proof-of-concept that would settle tokenized fund settlements and redemptions through the Swift network.
Swift, UBS, Chainlink Complete Pilot for Global Tokenized Fund Settlement Network

Swift, UBS, and Chainlink Complete Pilot for Tokenized Fund Settlements

The tokenized fund settlements raise the ante on digital assets, bringing them closer to integration with fiat payment systems at over 11,500 financial institutions across more than 200 countries and territories.

Traditional subscription and redemption settlement in funds are prone to several inefficiencies. Among these are the possibility of manual intervention, delayed settlements, and lack of real-time transparency. These critical flaws help increase operating costs at the expense of lesser liquidity and lost opportunities across the $63 trillion global mutual fund market.

The recent pilot has shown how financial institutions can utilize blockchain technology, particularly the Chainlink platform and the Swift network, to automate subscription and redemption processes for tokenized investment fund vehicles. This enables straight-through processing of the payment leg without relying on the widespread adoption of payment methods on-chain and effectively automates the whole lifecycle of the fund’s transaction.

Read more: BlackRock Tokenized Fund Now Pushed To Hit $2 Trillion Market

Enhancing Digital Asset Transactions through Global Payment Integration

The tokenized fund settlements pilot extends earlier collaborations between UBS Asset Management and SBI Digital Markets to develop a digital subscription and redemption system for tokenized funds. It is also part of Project Guardian by the Monetary Authority of Singapore. It is an initiative supporting global collaboration between policymakers and industry leaders to foster liquidity and efficiency in capital markets through asset tokenization.

Providing an existing Swift infrastructure, it thus facilitates end-to-end payment orchestration across the settlement of fund subscriptions and redemption. The pilot was an excellent test of how Swift can bring a secure, scalable connection linking financial institutions with different blockchains. Jonathan Ehrenfeld, Head of Strategy at Swift, said that was an essential part of the global adoption of digital assets, given that it has allowed traditional payment systems to connect with digital currencies for the first time.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.