Key Points:
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
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. |
London, United Kingdom, 21st November 2024, Chainwire
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