UBS Pioneers Blockchain-Based Payment System
Thursday, Nov 7, 2024 2:59 am ET
1min read UBS, the global financial giant, has taken a significant step towards modernizing traditional finance by piloting a blockchain-based payment system. In collaboration with Swift and Chainlink, UBS has successfully demonstrated how tokenized fund transactions can be seamlessly integrated with existing fiat payment systems, addressing long-standing inefficiencies in fund operations.
The pilot, conducted under the Monetary Authority of Singapore’s (MAS) Project Guardian, leveraged Swift’s global financial messaging network, encompassing over 11,500 institutions, to facilitate off-chain cash settlements for tokenized funds. This integration enabled real-time fund redemptions and subscriptions, automating the entire lifecycle of these processes without requiring global adoption of an on-chain form of payment.
Chainlink’s platform played a pivotal role in orchestrating interactions among stakeholders, ensuring the automatic minting and burning of fund tokens. By partnering with UBS Asset Management and SBI Digital Markets, Swift further developed a digital subscription and redemption system for tokenized funds, demonstrating the potential for blockchain technology to enhance traditional finance processes.
The pilot addresses key challenges in tokenized fund transactions, such as manual steps, delayed settlements, and limited transparency. By automating these processes, the initiative reduces operational costs, improves liquidity, and enhances transparency in the $63 trillion global mutual fund market. As regulatory and infrastructure challenges are overcome, tokenization could scale, reshaping the mutual fund landscape.
UBS’s blockchain-based payment system pilot showcases the potential for blockchain technology to revolutionize traditional finance. By integrating blockchain with existing financial networks, the pilot improves market efficiency, reduces operational costs, and enhances liquidity. As the global mutual fund market continues to grow, the successful integration of tokenized fund transactions with fiat payment systems paves the way for a more streamlined and efficient future.
The pilot, conducted under the Monetary Authority of Singapore’s (MAS) Project Guardian, leveraged Swift’s global financial messaging network, encompassing over 11,500 institutions, to facilitate off-chain cash settlements for tokenized funds. This integration enabled real-time fund redemptions and subscriptions, automating the entire lifecycle of these processes without requiring global adoption of an on-chain form of payment.
Chainlink’s platform played a pivotal role in orchestrating interactions among stakeholders, ensuring the automatic minting and burning of fund tokens. By partnering with UBS Asset Management and SBI Digital Markets, Swift further developed a digital subscription and redemption system for tokenized funds, demonstrating the potential for blockchain technology to enhance traditional finance processes.
The pilot addresses key challenges in tokenized fund transactions, such as manual steps, delayed settlements, and limited transparency. By automating these processes, the initiative reduces operational costs, improves liquidity, and enhances transparency in the $63 trillion global mutual fund market. As regulatory and infrastructure challenges are overcome, tokenization could scale, reshaping the mutual fund landscape.
UBS’s blockchain-based payment system pilot showcases the potential for blockchain technology to revolutionize traditional finance. By integrating blockchain with existing financial networks, the pilot improves market efficiency, reduces operational costs, and enhances liquidity. As the global mutual fund market continues to grow, the successful integration of tokenized fund transactions with fiat payment systems paves the way for a more streamlined and efficient future.
