The world-renowned Swiss bank UBS has started a live test of a tokenized version of its variable capital company (VCC) fund, which is a ground-breaking move. This endeavor is a component of Project Guardian, an initiative run by Singapore’s central bank with the goal of adding physical assets to the blockchain.
Thomas Kaegi, Head of UBS Asset Management for Singapore and Southeast Asia, expressed the significance of this project, saying, “Through this exploratory initiative, we will work with traditional financial institutions and fintech providers to help understand how to improve market liquidity and market access for clients.”
UBS Asset Management employed its in-house tokenization service, UBS Tokenize, to launch the controlled pilot of the tokenized money market fund. Powered by a smart contract on the Ethereum blockchain, UBS successfully executed redemptions and fund subscriptions, marking a milestone in fund tokenization.
This move aligns with UBS’s global distributed ledger technology strategy, focusing on leveraging private and public blockchains to enhance fund distribution and issuance.
In a parallel development, investment firms ARK Invest and 21Shares have teamed up to seek approval for two Ethereum futures exchange-traded funds (ETFs). The proposed ETFs, “ARK 21Shares Active Ethereum Futures ETF” (ARKZ) and “ARK 21Shares Active Bitcoin Ethereum Strategy ETF” (ARKY), are awaiting the green light from the US Securities and Exchange Commission (SEC).
However, the SEC has deferred its decision on these ETFs, along with Bitcoin ETF applications filed by companies like BlackRock and WisdomTree.
As the financial industry continues to embrace blockchain technology and explore Ethereum-based products, UBS stands at the forefront of innovation with its tokenized fund pilot, while ARK Invest and 21Shares patiently await regulatory approval for their Ethereum ETFs. These developments signify a shifting landscape in traditional finance towards the digital future.
