UBS Launches First Tokenized Fund

​UBS Asset Management has made a significant move into the digital asset space by launching its inaugural tokenized investment fund. The new UBS USD Money Market Investment Fund Token leverages Ethereum's blockchain technology, aiming to modernize the investment landscape.

Tokenization involves creating digital tokens that represent ownership in funds, which enhances the efficiency of managing and transferring these assets, akin to how transfer agents handle traditional fund shares. This innovation builds on previous uses of blockchain, where special purpose vehicles (SPVs) were employed to manage assets like real estate.

Market projections are optimistic, with a recent report from Invesco and Boston Consulting Group suggesting that assets under management (AuM) in tokenized funds could reach $600 billion by 2030. UBS's previous foray into this arena included a live pilot of a tokenized Variable Capital Company (VCC) fund last year.

Thomas Kaegi, co-head of UBS Asset Management for Asia Pacific, noted the increasing interest among investors in tokenized financial assets across various asset classes. This launch is a key part of UBS's ongoing expansion of its tokenization services, which recently included the issuance of fully digital structured notes amounting to CNH200 million ($28.04 million). In November 2023, UBS also completed what it claims was the first global cross-border repurchase transaction involving a digital bond settled on a public blockchain.