Swift, UBS Asset Management, and Chainlink have successfully completed a pilot for settling tokenized fund subscriptions and redemptions using the Swift network.
Successful pilot to bridge tokenized assets
Project Guardian, demonstrates how financial institutions can leverage existing Swift infrastructure to facilitate off-chain cash settlements for tokenized funds.
This initiative enables digital assets transactions to settle with fiat payment systems across more than 11,500 financial institutions, across over 200 countries and territories – a pretty major step forwards.
Traditional fund operations often face inefficiencies in subscription and redemption processes, including manual interventions, delayed settlements, and a lack of real-time transparency.
These inefficiencies lead to increased operational costs, reduced liquidity, and missed investment opportunities across the $63 trillion global mutual fund market.
The pilot showed how financial institutions can leverage blockchain technology, the Chainlink platform and the Swift network to settle subscriptions and redemptions for tokenized investment fund vehicles, thereby allowing the straight-through-processing of the payment leg without the need for the global adoption of an on-chain form of payment.
This helps in the automation of the entire lifecycle of the fund redemption and subscription process.
The pilot builds on work with UBS Asset Management and SBI Digital Markets to create a Digital Subscription and Redemption system for tokenized funds.
The pilot used existing Swift infrastructure which enables end-to-end payment orchestration capabilities to settle fund subscriptions and redemptions.
Swift previously demonstrated how its infrastructure can provide a secure, scalable way for financial institutions to connect to multiple types of blockchain, and this latest pilot with Chainlink’s platform orchestrated the necessary interactions between each of the respective actors to fulfil the pre-conditions for which a UBS tokenized investment fund will automatically mint or burn fund tokens for investors.
“For digital assets to be adopted globally, they must seamlessly integrate with both existing payment systems and digital currencies,” comments Jonathan Ehrenfeld, Head of Strategy, Swift.
“Our work with UBS Asset Management and Chainlink in MAS’ Project Guardian leverages the global Swift network to bridge digital assets with established systems.
This initiative aligns with our strategy to provide our community of financial institutions with a secure and scalable way to transact across multiple digital asset classes and currencies, leveraging Swift’s existing infrastructure.”
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