Swift, UBS, Chainlink pilot tokenized fund settlement

In a key development under the Monetary Authority of Singapore’s (MAS) Project Guardian, Swift, UBS Asset Management and blockchain oracle network Chainlink have completed a pilot for tokenized fund settlement.

This initiative uses Swift’s global financial messaging network — encompassing over 11,500 institutions — to integrate tokenized fund processes with existing fiat payment systems.

Unlike other tokenization pilots, the project enables transactions without blockchain-only payment options, promoting digital finance through existing infrastructure.

The pilot aligns with recent statements from Chainlink co-founder Sergey Nazarov at the Swift-organized Sibos conference on Oct. 23, where he discussed the potential blockchain integration with Swift.

Related: UBS launches tokenized fund, puts ETH ‘into the heart’ of TradFi

Addressing inefficiencies

Traditional fund transactions, particularly in redemptions and subscriptions, can be hindered by manual steps and delayed settlements, which add operational costs and impact liquidity.

A press release revealed that Swift’s infrastructure allowed real-time fund redemptions and subscriptions for tokenized investment funds to create an automated, cost-efficient and transparent process.

The release stated that the pilot evinces the use of blockchain technology for payment processing “without the need for the global adoption of an on-chain form of payment.”

Nazarov commented on this latest development, expressing that he was “very excited” by the adoption of “off-chain payment capabilities” and the way they “will increase the flow of capital.”

Related: Chainlink co-founder unveils blockchain payments for TradFi

Shift toward tokenized funds 

As part of Project Guardian, the pilot builds on the work of UBS and SBI Digital Markets in creating a Digital Subscription and Redemption system for tokenized funds.

The UBS rolled out a tokenized fund on the Ethereum blockchain on Nov. 1 in response to an increasing interest among investors for tokenized financial assets.

The bank launched the money market fund dubbed the “UBS USD Money Market Investment Fund Token,” or the “uMINT,” to serve investors’ growing demand.

The MAS announced its efforts to progress the commercialization of tokenizing assets, drawing from over 40 institutions to provide guidance through data from more than 15 trials.

Speaking at the first MAS Layer One Summit, MAS deputy managing director Leong Sing Chiong reviewed the successes of the large financial institutions participating in Project Guardian in demonstrating the potential for tokenization in foreign exchange and funds.

Sing Chiong also identified the limitations of those trials:

“No one has really succeeded in achieving scale. Many promising use cases have not yet gained industry wide traction. Further, there is a need for supporting infrastructure to enable good use cases to scale beyond individual networks.”

Magazine: AI agents trading crypto is a hot narrative, but beware of rookie mistakes