Swift, Chainlink, and UBS Partner on Groundbreaking Tokenized Fund Settlement Pilot

In a notable advancement for digital finance, the Monetary Authority of Singapore (MAS) has made strides under its Project Guardian initiative.

Blockchain firm Chainlink, financial messaging giant Swift, and Swiss bank UBS’s asset management division successfully piloted a system for tokenized fund settlement, potentially revolutionizing traditional finance infrastructure.

This pilot demonstrated how digital asset transactions could connect with current fiat payment networks, tapping into Swift’s vast network of over 11,500 financial institutions across more than 200 countries.

Bridging Digital Assets with Fiat Infrastructure

This pilot represents a significant evolution for digital finance by enabling digital assets to function seamlessly within established fiat payment frameworks, unlike other tokenization projects limited to blockchain-native transactions.

Traditionally, asset managers grapple with slow, manual subscription and redemption processes that hamper real-time transparency and liquidity. These limitations often result in operational inefficiencies, higher costs, and missed investment opportunities, particularly in the mutual fund industry.

Jonathan Ehrenfeld, Head of Strategy at Swift, emphasized the pilot’s significance: “For digital assets to gain global traction, they must integrate with existing payment systems and digital currencies. Our partnership with UBS and Chainlink under MAS’s Project Guardian leverages Swift’s global network to bridge digital and traditional finance.”

Revolutionizing Fund Settlement with Blockchain

Through this initiative, financial institutions explored the use of blockchain to enhance automation in fund subscription and redemption processes. By utilizing Chainlink’s blockchain technology combined with Swift’s extensive network, the pilot enabled efficient, on-chain processing without necessitating direct on-chain payments.

The result was a streamlined, automated workflow for tokenized fund transactions—speeding up processes and reducing reliance on manual intervention.

In conjunction with Project Guardian, UBS and SBI Digital Markets developed a “Digital Subscription and Redemption” mechanism to meet rising investor interest in tokenized assets.

UBS recently launched its tokenized fund, the “UBS USD Money Market Investment Fund Token” (uMINT), on the Ethereum blockchain, underscoring the growing trend toward asset tokenization in response to investor demand for digital financial assets.

MAS’s Layer One Summit Highlights Progress and Challenges

At MAS’s inaugural Layer One Summit, Deputy Managing Director Leong Sing Chiong highlighted the progress achieved by Project Guardian in showcasing tokenization’s potential in foreign exchange and financial markets.

Sing Chiong, however, noted the ongoing challenges: “No one has yet achieved significant scale in the sector. For real growth, the industry requires robust infrastructure to extend these initiatives beyond isolated networks.”

The pilot leveraged Chainlink’s technology to automate key transaction elements, such as issuing and burning fund tokens. By establishing a seamless operational framework without requiring complete on-chain payments, the pilot laid the groundwork for scalable, cross-platform fund settlements.

Key Takeaways:

• Innovative Collaboration: Chainlink, Swift, and UBS collaborated to connect digital assets with fiat networks, pushing digital finance forward.
• Tokenized Fund Launch: UBS launched the “uMINT” fund on Ethereum, addressing rising investor demand for tokenized assets.
• Scalability Challenges: MAS highlighted the need for industry-wide infrastructure to support tokenized asset scaling.

The success of this pilot marks a milestone for integrating digital assets within conventional financial networks, setting the stage for broader adoption and operational efficiency in the future.