UBS Says Live Tokenized Fund Transaction Demonstrates Value of Smart Contract-Based Technologies

UBS said Tuesday (Nov. 4) that it completed a live tokenized fund transaction leveraging Chainlink’s Digital Transfer Agent (DTA) technical standard.

This transaction saw the completion of an on-chain subscription and redemption request of the UBS USD Money Market Investment Fund Token, which is built on Ethereum distributed ledger technology, the global wealth manager and bank said in a Tuesday press release.

DigiFT, a provider of digital asset services for institutional real-world assets, functioned as the on-chain fund distributor and leveraged the DTA standard to request and process a subscription and redemption order, according to the release.

The tokenized fund workflow used in this transaction can cover the entire fund lifecycle, including order-taking, execution, settlement and data synchronization across on-chain and off-chain systems, per the release.

“This transaction represents a key milestone in how smart contract-based technologies and technical standards enhance fund operations and the investor experience,” Mike Dargan, group chief operations and technology officer at UBS, said in the release. “As the industry continues to embrace tokenized finance, this achievement illustrates how these innovations drive greater operational efficiencies and new possibilities for product composability.”

Chainlink Co-founder Sergey Nazarov said in the release that this tokenized fund transaction across chains “enables secure, compliant and scalable end-to-end workflows for tokenized assets.”

DigiFT Founder and Group CEO Henry Zhang said in the release that the demonstration showed “how fund operations can be executed and reconciled on-chain with real-time visibility.”

This transaction was part of the UBS Tokenize initiative, which is the bank’s in-house tokenization service initially focused on bonds, funds and structured products, per the release.

It was reported in July that the tokenization of shares of money market funds could help keep money market funds competitive with stablecoins while also creating new uses for them.

BNY and Goldman Sachs announced in July that they were launching a tokenization project in which they would use blockchain technology to maintain a record of customers’ ownership of select money market funds (MMFs).

The companies said at the time in a press release that their project is “a significant step towards enhancing the utility and transferability of existing MMF shares.”