Swiss banking giant UBS has joined the ranks of traditional finance institutions venturing into the world of tokenized assets, launching an investment fund on the Ethereum blockchain. This move follows similar initiatives by BlackRock and Franklin Templeton, signaling growing institutional interest in the potential of blockchain technology for traditional finance.
UBS’s new product, the USD Money Market Investment Fund Token (uMINT), will be backed by “money market instruments,” according to a recent press release. While the specific composition of the underlying assets remains unclear, it marks a significant step for UBS in exploring the tokenization of traditional financial products. It is yet to be confirmed whether US Treasury assets will be included, as is the case with BlackRock and Franklin Templeton’s tokenized funds, currently valued at $530 million and $410 million respectively, according to RWA.xyz.
This isn’t UBS’s first foray into the digital asset space. In 2022, the bank launched a digitally native bond settled on a private blockchain. UBS also participated in a pilot program led by the Monetary Authority of Singapore, focusing on the tokenization of traditional assets. These prior initiatives demonstrate the bank’s ongoing exploration of blockchain technology and its potential applications in finance.
While Wall Street remains cautious about certain aspects of the cryptocurrency ecosystem, the interest in tokenization is undeniable. BlackRock CEO Larry Fink has expressed his vision for the “tokenization of every financial asset,” highlighting the transformative potential of this technology.
Bernstein analysts have compared the launch of BlackRock’s tokenized fund, BUIDL, to the rise of ETFs, suggesting it could revolutionize financial markets with 24/7 instant settlement benefits. Other major financial institutions, including JPMorgan Chase and Visa, have also initiated projects exploring the tokenization of cash and other assets.
Money market funds, while new to the crypto space, are a well-established part of the traditional financial system, with over $6.4 trillion in assets in the US alone. This dwarfs the current $2.1 trillion valuation of the entire cryptocurrency market, highlighting the immense potential for tokenized money market funds.
Thomas Kaegi, co-head of UBS Asset Management’s Asian arm, noted the “growing investor appetite for tokenized financial assets across asset classes,” suggesting that UBS’s move is a response to increasing demand.
