Swiss bank UBS has launched a live pilot of a tokenized version of its Variable Capital Company (VCC) fund as part of the Project Guardian initiative led by Singapore’s central bank. UBS Asset Management said the fund is part of the broader VCC umbrella and aims to bring different types of real-world assets (RWA) to blockchain.

Thomas Kaegi, head of Singapore and Southeast Asia at UBS Asset Management, said the project is a milestone in understanding the tokenization of funds. UBS Asset Management has launched a controlled pilot of tokenized money market funds through its in-house tokenization service UBS Tokenize, using smart contracts on Ethereum to conduct various activities, including redemptions and fund subscriptions.

The pilot is also part of the company’s global distributed ledger technology (DLT) strategy, which focuses on using private and public blockchains to enhance the distribution and issuance of funds. However, while RWA tokenization may bring significant opportunities to many industries, the market outlook remains bleak as regulatory and technical challenges remain.