SWIFT, UBS, and Chainlink completed the pilot for tokenized fund payments on the SWIFT network, opening up the potential for integrating blockchain into the traditional financial system.
On November 5, the Monetary Authority of Singapore (MAS) announced the successful results of a significant pilot in the Guardian Project, marking a significant advance in integrating blockchain technology into the global financial system. SWIFT, UBS Asset Management, and the Chainlink blockchain oracle network collaborated to execute tokenized fund transactions on SWIFT's global financial messaging network, connecting over 11,500 organizations.
This experiment allowed transactions to occur without relying entirely on blockchain, leveraging existing infrastructure to promote digital finance.
The pilot took place after the speech of Chainlink co-founder Sergey Nazarov at the SWIFT-hosted Sibos Conference on October 23, where he discussed the potential of integrating blockchain with SWIFT. It also continues the work of UBS and SBI Digital Markets to create a Digital Subscription and Redemption system for tokenized funds under the Guardian Project.
Optimizing investment fund transactions
Traditional fund transactions, especially in buyback and subscription activities, often face difficulties due to complex manual processes and prolonged settlement times, leading to high operational costs and affecting liquidity.
MAS's experiment demonstrated the capability of blockchain technology to address these limitations. By utilizing SWIFT's infrastructure, tokenized fund buybacks and subscriptions were executed in real-time, creating a more automated, cost-efficient, and transparent process.
The distinguishing feature of this pilot compared to other tokenization experiments lies in that it does not require payment options solely through blockchain. Instead, it integrates the processes of tokenized funds with the existing fiat payment system. This allows for leveraging the benefits of blockchain technology without having to completely overhaul the current financial system. Nazarov expressed excitement about this off-chain payment capability and believes it will enhance capital flow.
UBS launched a tokenized fund on the Ethereum blockchain, named 'UBS USD Money Market Investment Fund Token' (uMINT), on November 1, meeting the growing demand from investors for tokenized financial assets. This move indicates the interest of major financial institutions in applying blockchain technology in fund management.
MAS is actively promoting the commercialization of asset tokenization, with the participation of over 40 organizations and data from more than 15 experiments. MAS Deputy Chief Executive Mr. Leong Sing Chiong praised the success of financial institutions in the Guardian Project, affirming the potential of tokenization in the forex and investment fund fields.
However, Mr. Sing Chiong also noted current challenges. Despite achieving promising results, scaling tokenization applications remains a puzzle to solve. 'No one has really achieved large scale yet,' Mr. Sing Chiong remarked. 'Many potential use cases have yet to attract widespread attention in the industry. Additionally, there is a need for supportive infrastructure to help good use cases scale beyond individual networks.'
