UBS Partners With MAS to Explore RWA Tokenization on Ethereum

Swiss banking giant UBS has taken a significant step towards the tokenization of real-world assets by launching a live pilot of its variable capital company (VCC) fund.

In a groundbreaking move, Swiss banking giant UBS has embarked on a pioneering journey by launching a live pilot of a tokenized version of its variable capital company (VCC) fund. This innovative initiative is a vital component of Project Guardian, a visionary endeavor led by the Monetary Authority of Singapore (MAS), Singapore's central bank. UBS Asset Management's recent announcement ushers in a new era in financial innovation, with the aim of tokenizing various real-world assets (RWA) as part of the broader VCC umbrella.

Meanwhile, the cryptocurrency industry witnessed another transformative moment as global investment manager VanEck unveiled the VanEck Ethereum Strategy ETF (EFUT), marking its live trading debut. This development underscores the continued evolution of the cryptocurrency market, with Ethereum (ETH) at its forefront. The EFUT ETF seeks capital appreciation through investments in Ethereum futures contracts, offering investors exposure to the world of ETH-linked investments. While it does not invest directly in Ethereum or other digital assets, VanEck's commitment to supporting Ethereum's development by donating a significant portion of ETF profits to Protocol Guild signals its dedication to the long-term growth and sustainability of the Ethereum network. This launch also coincides with the introduction of Ethereum futures-based exchange-traded funds (ETFs) in the United States, representing a milestone in the cryptocurrency's journey into traditional finance.

UBS Embarks on a Pioneering Journey with Tokenized Fund Pilot

UBS, one of Switzerland's leading banks, has taken a monumental step in the world of finance by launching a live pilot of a tokenized version of its variable capital company (VCC) fund. This pioneering endeavor is part of Project Guardian, an ambitious initiative spearheaded by the Monetary Authority of Singapore (MAS), the country's central bank. In a recent press release, UBS Asset Management unveiled this groundbreaking development and its broader vision to tokenize various real-world assets (RWA) under the VCC umbrella.

Thomas Kaegi, the Head of UBS Asset Management for Singapore and Southeast Asia, expressed the significance of the project, stating, "Through this exploratory initiative, we will work with traditional financial institutions and fintech providers to help understand how to improve market liquidity and market access for clients."

The controlled pilot of the tokenized money market fund was launched using UBS's proprietary tokenization service, aptly named "UBS Tokenize." Leveraging the robust and secure Ethereum blockchain, the bank successfully executed a wide range of activities, including fund subscriptions and redemptions. This bold move is an integral part of UBS Asset Management's global distributed ledger technology strategy, which aims to enhance fund distribution and issuance through the utilization of both private and public blockchains.

This groundbreaking development marks a significant step forward in the long-anticipated journey toward the tokenization of real-world assets. Ellis Wang, a government adviser from the United Arab Emirates, emphasized the numerous advantages of this technology during a panel discussion at the World Token Summit 2023. Wang noted that tokenizing RWAs offers transparency and security, which are inherent features of blockchain technology. He further predicted that the tokenization of RWAs could gain widespread adoption, presenting countless opportunities for various industries.

The growing interest in protocols centered around RWAs has been a noteworthy trend in the world of decentralized finance (DeFi). As of 9 June 2023, the token gains of Centrifuge, a platform dedicated to RWA tokenization, had surged by an impressive 32% year-to-date, outperforming other sub sectors within the DeFi ecosystem.

UBS's venture into the tokenization of its VCC fund underscores the increasing importance of blockchain technology and digital assets in the traditional financial sector. This move not only showcases the bank's dedication to innovation but also paves the way for further developments in the tokenization of real-world assets. It has the potential to transform the landscape of global finance by introducing greater efficiency, transparency, and accessibility.

The collaboration with MAS further cements Singapore's position as a leading hub for blockchain and fintech innovation. With the backing of a forward-thinking central bank, UBS and other financial institutions operating in the region have the opportunity to explore and harness the transformative power of blockchain technology on a significant scale.

UBS's foray into the world of tokenized assets not only sets a new standard for the banking industry but also opens the door to a future where traditional financial instruments and digital assets coexist harmoniously, offering investors greater choice, security, and accessibility. As the pilot progresses, the financial world will be watching closely to see how this pioneering initiative unfolds and its potential impact on the broader global financial landscape.

VanEck Launches Ethereum Strategy ETF (EFUT) for Trading

Meanwhile, in a noteworthy development for the cryptocurrency industry, global investment manager VanEck has announced the launch of the VanEck Ethereum Strategy ETF (EFUT), now live for trading. This exciting move comes as the cryptocurrency market continues to evolve, with Ethereum (ETH) solidifying its position as a leading digital asset.

The VanEck Ethereum Strategy ETF is designed to seek capital appreciation by investing in Ethereum futures contracts. This actively managed fund provides investors with exposure to ETH-linked investments through an exchange-traded instrument. It is worth noting that the fund does not directly invest in Ethereum or other digital assets but instead focuses on the futures market.

According to VanEck, the fund became effective on 29 September 2023, and is now available for trading. This milestone is not only significant for the investment management industry but also marks a noteworthy moment for the broader cryptocurrency ecosystem.

One particularly exciting aspect of VanEck's announcement is its commitment to support Ethereum development. VanEck has pledged to donate 10% of the profits generated by the EFUT ETF to Protocol Guild, an initiative that provides grassroots funding for over 150 individuals critical to maintaining Ethereum's core protocol. This commitment extends for at least a decade, highlighting VanEck's dedication to the long-term growth and sustainability of the Ethereum network.

The launch of the VanEck Ethereum Strategy ETF comes as Ethereum-based investment products gain traction in the United States. This move concludes a years-long campaign by various firms to establish investment vehicles centered around Ethereum, the second-largest cryptocurrency by market capitalization.

In addition to VanEck's Ethereum futures fund, other financial institutions such as ProShares and Bitwise have also filed with the U.S. Securities and Exchange Commission (SEC) to launch exchange-traded funds based on Ethereum futures. These developments signify the growing acceptance of digital assets and blockchain technology within the traditional financial sector.

The debut of these Ethereum-focused ETFs presents investors with more opportunities to gain exposure to the cryptocurrency market while benefiting from the regulatory oversight and structure associated with traditional investment products. As the cryptocurrency ecosystem continues to mature, these ETFs are expected to play a crucial role in attracting both institutional and retail investors to the world of digital assets.

The launch of the VanEck Ethereum Strategy ETF represents a significant step forward in the integration of cryptocurrencies into traditional financial markets. It not only provides investors with a new way to participate in the Ethereum market but also highlights the growing importance of Ethereum in the broader blockchain and digital asset landscape.

Price Overview

At press time, CoinStats data indicated that ETH suffered a 24-hour loss. Throughout the past day of trading, the leading altcoin’s price had dropped 3.54% - bringing the cryptocurrency’s price down to $1,665.01. Despite the recent decrease in value, ETH’s weekly performance remained in the green zone and stood at +4.64%.

Price chart for ETH (Source: CoinStats)

ETH had established a high of $1,738.63 during the past 24-hour cycle. Since then, the altcoin’s price had retraced to fall below the psychological $1.7K mark. Moreover, this correction in ETH’s price resulted in the cryptocurrency trading near its daily low of $1,651.18 at press time.