UBS launches a tokenised money market fund on Ethereum

Sunday, November 3, 2024

After BlackRock and Franklin Templeton, the Swiss bank is a new leading financial institution to launch a tokenized fund on a public blockchain.

And another tokenized money market fund! After BlackRock and Franklin Templeton, Swiss bank UBS announced on Friday the launch of its first fund on Ethereum.

According to the world's largest private bank ($4 trillion in assets under management), this fund, named "uMINT", is designed to "offer investors access to high-quality money market instruments".

"We have seen growing investor appetite for tokenized financial assets," confirmed in a statement Thomas Kaegi, co-head of UBS's Asian branch.

The advantage of a public blockchain is that it's an open infrastructure and therefore potentially faster and less expensive than the traditional financial system.

"Tokenization could make financial markets more efficient by simplifying the value chain and reducing costs for investors," Larry Fink had written in March 2023, in his annual letter sent to investors.

The exact composition of the uMINT fund, which is denominated in dollars and based in Singapore, has not yet been revealed, but it is expected to be largely composed of U.S. Treasury bonds. The purchase of fund shares will be done in stablecoin.

UBS has also not communicated on its ambitions in terms of volumes for its fund. The only certainty is that it is, for now, reserved for qualified investors.

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With this tokenized fund, UBS joins BlackRock, Franklin Templeton, WisdomTree Investments, Wellington and other financial players.

Launched in April, BlackRock's tokenized fund "Buidl" is now the largest in the market. Composed of US Treasury bills — debt — it recently exceeded $500 million.

‍For its part, the "FOBXX" fund from American bank Franklin Templeton, also based on US Treasury bills, has surpassed $400 million.According to the RWA.xyz dashboard, the Ethereum blockchain now has just over $3 billion in tokenized assets; US debt is the main tokenized asset.

The advantages of using tokenized money market funds are multiple:

1/ dividends are paid daily.

2/ investors can transfer fund tokens 24/7, 365 days a year.

3/ these money market funds can serve as collateral in operations, particularly in decentralized finance.

"What particularly interests institutional investors is the ability to split the receipt of returns over very short time intervals, a feature that doesn't exist in the traditional financial world," explains Jean-Marie Mognetti, CEO of CoinShares, one of the main European asset managers specializing in crypto.

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This analysis is not investment advice. It has been prepared without taking into account your personal situation, particularly your financial situation, risk profile, and investment objectives.

Before investing in any product, investors should fully understand the risks involved and consult their own legal, tax, financial, and accounting advisors.

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