Swift Settles Tokenized Fund Subscriptions and Redemptions on Its Network

Swift has completed a successful pilot for tokenized fund subscriptions and redemptions using its network.

The project — completed in partnership with UBS Asset Management and Chainlink — would allow digital asset transactions to settle with fiat payment systems across more than 11,500 financial institutions, in more than 200 countries and territories, Swift said Tuesday (Nov. 5).

“Traditional fund operations often face inefficiencies in subscription and redemption processes, including manual interventions, delayed settlements, and a lack of real-time transparency,” Swift said in a news release. “These inefficiencies lead to increased operational costs, reduced liquidity, and missed investment opportunities across the $63 trillion global mutual fund market.”

The pilot, the release added, demonstrates how financial institutions can leverage blockchain technology, the Chainlink platform and the Swift network to settle subscriptions and redemptions for tokenized investment fund vehicles. This allows for the straight-through-processing of the payment leg with no need for the global adoption of an on-chain form of payment, helping to automate the lifecycle of the fund redemption and subscription process.

According to Swift, the pilot builds on efforts of UBS Asset Management and SBI Digital Markets to create a digital subscription/redemption system for tokenized funds.

It is also part of the Monetary Authority of Singapore’s (MAS) Project Guardian, an effort among policy makers and key industry players to enhance liquidity and efficiency of financial markets via asset tokenization.

“For digital assets to be adopted globally, they must seamlessly integrate with both existing payment systems and digital currencies,” said Jonathan Ehrenfeld, Swift’s head of strategy. “Our work with UBS Asset Management and Chainlink in MAS’ Project Guardian leverages the global Swift network to bridge digital assets with established systems.”

In other Project Guardian news, MAS — Singapore’s banking regulator — announced this week plans to bolster tokenization in the financial services industry.

The authority said the effort will include deepening the liquidity of tokenized assets by the formation of commercial networks.

“MAS has seen strong interest in asset tokenization in recent years, notably in fixed income, FX and asset management,” Leong Sing Chiong, deputy managing director for markets and development at the authority, said in a news release. “We are encouraged by the keen participation from financial institutions and fellow policymakers to co-create industry standards and risk management frameworks to facilitate commercial deployment of tokenized capital markets products, and scale tokenized markets on an industry-wide basis.”