SBI Digital Markets, UBS Asset Management, and Chainlink have successfully completed a pilot program showcasing the use of smart contracts to manage tokenized funds. The companies announced this groundbreaking achievement on November 18, 2024, highlighting the innovative solution that brings automated tokenized fund management to the market while leveraging the Chainlink infrastructure.
The pilot program demonstrated how fund managers can utilize smart contracts and Chainlink’s Cross-Chain Interoperability Protocol to efficiently scale their products on-chain and across distributors. Central to this initiative is the Digital Transfer Agent smart contract model, a novel fund administration system that utilizes multiple Chainlink oracle networks. SBI’s custodian and fund distributor successfully deployed this model to enable multi-chain subscriptions and redemptions.
The demand for on-chain administration in the tokenized funds industry is on the rise, as traditional fund operators face key bottlenecks due to the lack of automation in their data inputs and workflow processes. Smart contracts, oracle networks, and tokenized funds provide the asset management industry with a pathway to full automation, offering new on-chain financial products and lower operational costs to investors.
Winston Quek, the chief executive officer at SBI Digital Markets, emphasized the empowering nature of launching fund structures and administering them via smart contracts. He stated, “This new way of launching fund structures and administering them via smart contracts empowers both fund managers and their service providers to deliver new on-chain financial products and lower operational costs to investors, both things they are actively looking for.”
The solution, currently live on various blockchain testnets, is set to go live on the mainnet soon. The announcement of this groundbreaking solution was made at the Singapore Fintech Festival, as part of the Monetary Authority of Singapore’s ‘Project Guardian.’ This development follows a partnership between Swift, UBS Asset Management, and Chainlink aimed at bridging tokenized assets with legacy payment systems. UBS also recently unveiled a pilot for cross-border payments called “UBS Digital Cash.”
Overall, the completion of this pilot program marks a significant milestone in the advancement of automated tokenized fund solutions, showcasing the potential for smart contracts and blockchain technology to revolutionize the asset management industry. As the industry continues to evolve, the integration of these innovative technologies is expected to drive efficiency, transparency, and cost savings for investors and fund managers alike.