Swift’s tokenized fund settlement pilot with UBS and Chainlink deemed a success News ▸ Chainlink ▸ Technology
Swift’s tokenized fund settlement pilot with UBS and Chainlink deemed a success
Swift's pilot links 11,500 financial institutions to automate tokenized fund processes, reducing costs and enabling real-time transparency.
2 min read
Updated: Nov. 5, 2024 at 3:19 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Swift, the global bank messaging network, announced on Nov. 5 that it has concluded a pilot program to streamline tokenized fund settlement and redemption using fiat currency on its network in collaboration with UBS Asset Management and Chainlink.
This initiative aims to link digital asset transactions with existing fiat payment systems, reaching over 11,500 financial institutions globally in more than 200 countries.
According to Swift, traditional funds often encounter ineffective subscription and redemption processes, which require manual intervention, delay settlements, and lack real-time transparency. These challenges contribute to higher operational costs, reduced liquidity, and missed investment opportunities, particularly in the mutual fund market.
Through the pilot, financial institutions explored using blockchain technology to automate and speed up these processes. Leveraging Chainlink’s platform alongside Swift’s network, the program enabled efficient, on-chain processing for tokenized fund subscriptions and redemptions without needing direct on-chain payment. The result was a streamlined, automated fund subscription and redemption process.
Expanding on cross-chain tokenized funds
This pilot builds on prior efforts by UBS Asset Management and SBI Digital Markets, which focused on digital subscription and redemption systems for tokenized funds. This aligns with Singapore’s Monetary Authority’s (MAS) Project Guardian, which brings together regulators and industry leaders to explore innovations in digital finance.
The pilot used Swift’s infrastructure to demonstrate end-to-end payment orchestration for fund subscriptions and redemptions. Chainlink’s platform was used to coordinate transactions and fulfill the conditions necessary for UBS’s tokenized investment fund to mint or burn fund tokens on behalf of investors.
Swift’s Head of Strategy, Jonathan Ehrenfeld, noted that the initiative supports seamless integration with existing payment systems and digital currencies. According to Ehrenfeld, this collaboration with UBS Asset Management and Chainlink under Project Guardian leverages Swift’s global network to connect digital assets with conventional systems.
Similarly, Sergey Nazarov, Co-Founder of Chainlink, highlighted the benefits of integrating Swift’s infrastructure to enable off-chain payments for digital assets. He expressed optimism about the upcoming adoption of these capabilities and their potential to increase capital flows and broaden the digital asset user base.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Chainlink is a decentralized oracle network that connects smart contracts on the blockchain to real-world data.
Sergey Nazarov began his career building peer-to-peer marketplaces, going on to the investment team at FirstMark Capital.