UBS Asset Management has launched its first live pilot of a tokenized variable capital company (VCC) fund in Singapore. The fund is part of a wider VCC umbrella designed to bring various “real world assets" on-chain as part of Project Guardian, a collaborative industry initiative led by the Monetary Authority of Singapore (MAS).

Using the firm’s in-house tokenization service, UBS Tokenize, the tokenized money market fund represents a smart contract on the ethereum public blockchain. The pilot enables UBS Asset Management to carry out various activities including fund subscriptions and redemptions.

“This is a key milestone in understanding the tokenization of funds, building on UBS’s expertise in tokenizing bonds and structured products,” says Thomas Kaegi, head of UBS Asset Management, Singapore and Southeast Asia. “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.”

The pilot is part of UBS Asset Management’s global distributed ledger technology strategy, focused on leveraging public and private blockchains networks for enhanced fund issuance and distribution.

It also forms part of the broader expansion of UBS’s tokenization services. In November 2022, the bank launched the world’s first digital bond that is publicly traded. A month later, UBS issued a US$50 million tokenized fixed rate note in December 2022, and in June 2023 originated 200 million yuan (US$27.6 million) of fully digital structured notes for a third-party issuer.

UBS Asset Management plans to execute further live pilot use cases under Project Guardian, working with a wider set of partners and exploring various investment strategies.