Swift, UBS Asset Management, and Chainlink have completed a pilot for settling tokenized fund subscriptions and redemptions using the Swift network.
This initiative would reportedly enable digital asset transactions to settle with fiat payment systems across more than 11,500 FIs, across 200+ countries and territories.
Traditional fund operations often face inefficiencies in subscription and redemption processes, including “manual interventions, delayed settlements, and a lack of real-time transparency.”
These inefficiencies lead to increased operational costs, “reduced liquidity, and missed investment opportunities across the $63 trillion global mutual fund market.”
The pilot showed how financial institutions can leverage blockchain technology, the Chainlink platform and the Swift network to settle subscriptions and “redemptions for tokenized investment fund vehicles, thereby allowing the straight-through-processing of the payment leg without the need for the global adoption of an on-chain form of payment.”
This helps in the automation of the entire “lifecycle of the fund redemption and subscription process.”
The pilot builds on work with UBS Asset Management and SBI Digital Markets to create a Digital Subscription and Redemption “system for tokenized funds.”
This initiative is notably part of MAS’ Project Guardian, a global cooperation between policy makers and key industry players to “enhance liquidity and efficiency of financial markets through asset tokenization.”
The pilot used existing Swift infrastructure which enables “end-to-end payment orchestration capabilities to settle fund subscriptions and redemptions.”
Swift previously demonstrated how its infrastructure can provide a secure, scalable way for financial institutions to “connect to multiple types of blockchain, and this latest pilot with Chainlink’s platform orchestrated the necessary interactions between each of the respective actors to fulfil the pre-conditions for which a UBS tokenized investment fund will automatically mint or burn fund tokens for investors.”
Sergey Nazarov, Co-Founder of Chainlink explained that service provider is enabling institutions to “reuse Swift’s infrastructure to facilitate payments for digital asset transactions.”
Sergey added that he is looking forward to this and 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.”
