Swift, UBS Asset Management, and Chainlink have reached an important milestone by completing a successful pilot project that settles tokenized fund transactions over the Swift network.
This step moves blockchain technology closer to traditional finance, enabling digital asset transactions alongside fiat systems and connecting over 11,500 financial institutions in more than 200 countries.
What is the Pilot Blockchain-Based Fund Settlement?
The traditional process for fund subscriptions and redemptions is often slow, involving manual steps, settlement delays, and limited transparency. These issues create challenges in the global mutual fund market, worth over $63 trillion, leading to higher costs, lower liquidity, and missed opportunities.
By combining Swift’s network with Chainlink’s blockchain platform, this pilot aims to streamline these processes, supporting real-time, automated transactions for tokenized funds without requiring payments to stay entirely on-chain.
This pilot builds on previous work by UBS Asset Management and SBI Digital Markets to develop a Digital Subscription and Redemption system for tokenized funds, aligned with Singapore’s Project Guardian.
Led by the Monetary Authority of Singapore (MAS), Project Guardian is a global initiative that gathers policymakers and industry leaders to explore how tokenization can boost market efficiency and liquidity.
A Smooth End-to-End Payment Process for the Users
Using Swift’s existing infrastructure, the pilot demonstrated a smooth, end-to-end payment process for fund subscriptions and redemptions. This setup allows financial institutions to manage tokenized assets across blockchain networks, streamlining the interactions without requiring every payment to be blockchain-only. Chainlink’s platform coordinated these processes, enabling UBS’s tokenized fund to mint or burn tokens as needed.
Jonathan Ehrenfeld, Head of Strategy at Swift, noted, “For digital assets to go global, they need to work seamlessly with both current payment systems and digital currencies.”
Ehrenfeld emphasized that Swift’s work with UBS and Chainlink in Project Guardian is aimed at bridging digital and traditional assets, using Swift’s infrastructure to expand digital asset use among financial institutions worldwide.
Sergey Nazarov, co-founder of Chainlink, highlighted the advantages of this integration, explaining that it allows financial institutions to use Swift’s network for off-chain payments in digital asset transactions, increasing capital flow and improving access to digital assets.
Speaking at Swift’s Sibos conference on Oct. 23, Nazarov reinforced Chainlink’s commitment to integrating blockchain in finance and noted that the pilot underscores blockchain’s potential for real-world asset transactions.
This pilot not only shows how blockchain can reshape finance but also highlights the strategic value of merging digital assets with existing financial systems. With encouraging results, this project could mark a step toward broader blockchain adoption in traditional finance, paving the way for more efficient and automated asset transactions on a global scale.