Swift, UBS, and Chainlink Complete Pilot for Settling Tokenized Funds

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Tanzeel Akhtar

Journalist

Tanzeel Akhtar

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Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk, Bitcoin Magazine and Bitcoin.com.

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Last updated:

November 5, 2024 06:07 EST

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UBS Asset Management, Swift and Chainlink have completed a pilot project allowing the settlement of tokenized fund subscriptions and redemptions using the Swift network.

In an announcent the firms said the settlement involves using Chainlink’s blockchain technology and allows digital asset transactions to be combined with traditional fiat payment systems.

Pilot is Part of MAS Project Guardian

The pilot was launched under the Monetary Authority of Singapore’s (MAS) Project Guardian, which is looking to explore the use of digital assets in financial markets.

This latest trial experiments how financial institutions can use the existing Swift infrastructure to conduct off-chain cash settlements for tokenized fund transactions.

What Is the Use Case?

According to Chainlink traditional fund subscriptions and redemptions are often impacted by inefficiencies. This includes manual processing, delays in settlement, and a lack of real-time data.

These issues drive up operational costs and limit liquidity. This in turn can lead to missed investment opportunities in the global mutual fund market, valued at around $63 trillion.

By using blockchain technology combined with Swift’s network, the pilot shows there is a possible method for financial institutions to settle tokenized fund transactions.

In this latest pilot project, Chainlink’s platform helped with the interactions to fulfil preconditions for UBS’s tokenized funds, allowing for the automatic minting or burning of fund tokens for investors.

“Chainlink is enabling institutions to reuse Swift’s infrastructure to facilitate payments for digital asset transactions,” said Sergey Nazarov, co-founder of Chainlink.

“I am very excited by the upcoming adoption of these off-chain payment capabilities and how they will increase the flow of capital and expand the possible user base of digital assets,” said Nazarov in a statement.

LINK Token Sees Trading Volume Rise

Major news from Chainlink has been triggering bullish momentum for its token LINK, which has recently seen an influx of $500M in trading volume. It seems Chainlink is regaining prominence.

Developments have improved the fundamental outlook for this essential crypto oracle, spotlighting its critical role in the broader cryptocurrency ecosystem, reports Sam Cooling for CryptoNews.