Swift, UBS and Chainlink have successfully completed an innovative pilot for tokenized fund settlement on the SWIFT network, improving the efficiency and transparency of fund operations in the global financial ecosystem.
The collaboration between Swift, UBS Asset Management and Chainlink has taken a step forward in modernizing traditional finance.
Recently, Swift, an acronym for Society for Worldwide Interbank Financial Telecommunication, announced the successful completion of a pilot project within the framework of the Guardian Project of the Monetary Authority of Singapore (MAS), which seeks to integrate tokenized funds with existing payment systems through its interbank network, which connects more than 11.500 financial institutions in more than 200 countries.
This innovative pilot not only promises to improve efficiency and transparency in the settlement of funds, but also sets a new standard for how digital assets can interact with conventional financial infrastructures.
Solving the challenges of traditional fund liquidation
In a release In a recently released statement, Swift highlighted that traditional fund operations often face inefficiencies that can increase operating costs, limit liquidity and result in lost investment opportunities in the mutual fund market, which currently stands at $63 trillion.
However, through the pilot developed in collaboration with UBS and Chainlink, Swift seeks to address all of these inefficiencies and allow fund transactions to be made in real time through tokenization and using their existing infrastructure. This means that tokenized funds can be subscribed and redeemed more quickly and efficiently, eliminating the need for manual processes and reducing the costs associated with this process.
“The pilot showed how financial institutions can leverage blockchain technology, the Chainlink platform and the Swift network to settle subscriptions and redemptions of tokenized investment fund vehicles”, stressed the international community, underlining how Blockchain technology helps in automation of the entire life cycle of the fund redemption and subscription process.
The integration of blockchain technology into traditional finance
This pilot distinguishes itself from other tokenization efforts by enabling transactions without relying exclusively on blockchain-based payment methods. Swift explained that rather than requiring global adoption of an on-chain payment system, the project leveraged Swift’s existing infrastructure to facilitate payments, representing a significant advancement in integrating digital assets into today’s financial ecosystem.
Jonathan Ehrensfeld, Swift's chief strategy officer, emphasized that, For digital assets to be adopted globally, it is crucial that they integrate seamlessly with existing payment systems.To this end, collaboration with UBS and Chainlink has been crucial, allowing the use of the Swift network to connect digital assets with traditional payment platforms.
Automation and efficiency in settlement
But in addition to improving the adoption of digital assets, this pilot also focuses on automating the entire lifecycle of fund subscription and redemption processes, through the use of blockchain technology and the Chainlink platform. This automation promises to not only increase efficiency, but also offer a more transparent and cost-effective process for the market.
Sergey Nazarov, co-founder of Chainlink, expressed his enthusiasm for the adoption of off-chain payment capabilities, highlighting how these innovations can increase the flow of capital and expand the user base of digital assets. The possibility of conducting fast and secure transactions without relying on proprietary blockchain infrastructure is a key factor in promoting the adoption of tokenized assets, such as investment funds.
The completion of this pilot aligns with the growing trend towards asset tokenization, which has gained significant momentum in recent years. UBS, for example, launched a tokenized fund on the Ethereum blockchain, known as “uMINT,” in response to growing investor demand for tokenized financial assets. Also, the Monetary Authority of Singapore has been actively working on promoting asset tokenization, collaborating with over 40 institutions to explore and develop use cases in this space.
Therefore, the success of the Swift, UBS and Chainlink pilot could be a catalyst for the broader adoption of tokenized funds and other digital assets in the global financial ecosystem.
Main image from Pixabay
