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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.
He added that the approval was seen as a deviation from the SEC’s usual stance, indicating a potential shift influenced by political pressures.
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.
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.
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.
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.
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.
“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.