$5.7 Trillion Asset Giant UBS Unveils Ethereum-Powered Money Market Fund

• UBS has introduced a tokenized money market fund built on the Ethereum blockchain, signaling a significant step towards embracing digital assets in traditional finance.
• As the $5.7 trillion firm joins a growing list of institutional players adopting tokenized solutions, this move highlights the increasing acceptance of decentralized technology.

UBS Asset Management, a large-scale investment manager with a presence in 50 markets has announced the launch of “UBS USD Money Market Investment Fund Token” (“uMINT”), a Money Market investment built on Ethereum distributed ledger technology.

In the official report released on November 1, Thomas Kaegi, the Co-Head of UBS Asset Management stated that the launch of uMINT came as a result of the growing investors’ appetite for tokenized financial assets across asset classes.

To its advantage, the Monetary Authority of Singapore (MAS) has actively fostered the growth of digital assets, creating an ideal environment for UBS’s new offering. By establishing uMINT in Singapore, UBS aims to capitalize on this regulatory clarity to attract institutional investors who may be cautious about tokenized assets.

This Singapore-based fund will utilize the Ethereum blockchain to offer investors an institutional quality cash management solution that relies on high-grade money market instruments while ensuring controlled risk.

One of the most important facets of uMINT is the enhanced transparency provided by Ethereum. Every transaction within the fund will be recorded on a public ledger, allowing investors to verify the fund’s activities in real-time. 

Security is a crucial consideration in investment management. To curb the long-standing security issue, Ethereum’s DLT provides a decentralized environment that minimizes the risk of fraud and hacking. Both institutional and retail investors can feel more secure about their investments in uMINT with advanced encryption models safeguarding assets.

The tokenization of the Money Market Investment Fund Token can significantly enhance liquidity, facilitating quicker buying and selling of fund shares. This is particularly beneficial for institutional clients who require flexibility and responsiveness in their investment strategies.

Tokenization Through UBS’s Lens

UBS has been enhancing its digital asset offerings with UBS Tokenize, its proprietary tokenization service. This initiative aims to tap into the realm of decentralized finance by lowering barriers and granting a wider range of market participants access to various products and services, thereby fostering closer connections among them. UBS plays a significant role in tokenized cash as a founding member of Fnality, an institutional settlement network that facilitates the tokenization of balances maintained in central bank accounts.

In June 2023, the company issued digital structured notes valued at RMB 200 million (approximately $28 million) on the Ethereum network. Later that same year, UBS executed the world’s first cross-border repo transaction on a public blockchain, collaborating with banking partners DBS and SBI Digital Asset Holdings. 

DBS is a leading financial services group in Asia with a presence in 19 markets while SBI Digital Assets Holdings (SBI DAH) oversees and operates digital asset-related businesses under the umbrella of SBI Holdings. Throughout this year, several tokenized money market funds have entered the market, including BlackRock’s BUIDL and Franklin Templeton’s FOBXX. Goldman Sachs is also planning to introduce its own tokenized fund soon.