UBS Expands Digital Asset Capabilities with Hong Kong’s Tokenized Warrant on Ethereum Network

UBS AG (NYSE:UBS) announced the launch of Hong Kong’s investment-grade tokenized warrant on the Ethereum public blockchain network.

This innovative product utilizes the on-chain issuance product framework “offered by UBS Tokenize, the bank’s in-house tokenization service.”

The product is a call warrant with Xiaomi Corporation as the underlying stock.

The tokenized warrant is reportedly “the first natively issued warrant on a public blockchain that was sold to OSL Digital Securities Limited, a licensed virtual asset platform operator and wholly-owned subsidiary of OSL Group (formerly BC Technology Group).”

Winni Cheuk, Head of Sales, APAC Public Distribution, UBS Global Markets said:

“The introduction of the UBS tokenized warrant reinforces the bank’s position as the leading derivative products issuer in Hong Kong1. Created natively on a public blockchain in a permissioned environment, this innovative product enhances transparency, reduces transaction fees, streamlines settlement processes, and allows for more flexible trading hours.”

Patrick Pan, Chairman and Chief Executive Officer at OSL Group, said:

“OSL is proud to be working with the team of blockchain and product experts at UBS. We are simulating the whole product life cycle of an equity-linked structured product token, from token mint, through simulated secondary market transactions, and finally to token burn at maturity. Hong Kong’s regulated virtual asset landscape has just crossed another major milestone with this Investment grade tokenized financial product issuance.”

In general, tokenized warrants’ key features and benefits would include:

  • Accessibility: Tokenization opens a new channel for investors to access digital structured products. Blockchain technology enables better accessibility (using a compatible platform) and extends trading hours.
  • Efficiency: Tokenized warrants utilize smart contracts that allow automation, streamline trading and administrative processes, lower handling costs, making it more efficient than traditional channels.
  • Transparency: Blockchain technology provides transparency as all transactions and ownership records can be stored on a decentralized ledger.

This tokenized warrant is part of UBS’s ongoing effort “to develop its tokenization services further.”

Since 2015, UBS claims that it has been “at the cutting edge of blockchain technology and digital assets.”

UBS explores various digital asset opportunities “with a focus on developing institutional grade infrastructure for tokenized assets.”

UBS Tokenize is part of UBS’ ongoing work “in tokenization services and global distributed ledger technology.”

It supports opportunities “across origination, distribution, and custody, initially focusing on tokenization of bonds, funds, and structured products.”

In 2022, the bank reportedly issued “the first ever USD 50 million tokenized fixed rate note sold to Asia Pacific clients through the UBS Tokenize platform.”

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