UBS Asset Management is piloting a tokenized Variable Capital Company (VCC) fund in Singapore.
The pilot program, led by the Monetary Authority of Singapore (MAS), is leveraging UBS’ in-house tokenization service (UBS Tokenize), which allows for fund subscriptions and redemptions to be managed through a smart contract. This initiative is part of the company’s global strategy to enhance fund issuance and distribution by utilizing distributed ledger technology (DLT) on both public and private blockchain networks.
Improving Market Liquidity
The VCC fund represents a growing trend in the financial sector towards leveraging blockchain technology for asset management and trade finance. It mirrors similar moves by other financial institutions, including Citigroup, which introduced Citi Token Services—a new blockchain-based cash management and trade finance solution for institutional clients. The service converts customer deposits into digital tokens, which can be instantly transferred internationally.
These efforts also reflect how tokenization can improve market liquidity and access for clients, streamline processes, and enable real-time, 24/7 transaction banking experiences. Overall, the developments are part of a broader trend in the fintech world where blockchain technology is being used to address inefficiencies in traditional financial systems and offer innovative solutions. As more financial institutions explore these technologies, we expect to see further advancements and efficiencies in global finance.
The Allure of Blockchain Continues
While the collapse of crypto companies such as FTX can create negative headlines, it’s important to keep sight of the bigger picture: blockchain technology is driving significant innovation in the financial industry.
Investment in blockchain technology by financial institutions continues to grow, indicating that investors see potential in this technology and are willing to accept some level of risk associated with it. As the industry matures, so does its regulatory environment, which can lead to more stability and fewer company collapses in the future.