Important highlights:
- Together, ChainLink, Swift and UBS have developed a solution that allows banks to manage tokenized funds through Swift and CRE.
- Pilot testing showed smooth fund subscription and redemption via ISO 20022 Swift messaging.
- This approach brings blockchain speed, transparency and efficiency to the $100 trillion fund industry.
Using Swift Messaging and the ChainLink Runtime Environment (CRE), ChainLink has made significant innovations by enabling financial institutions to manage digital asset management directly from existing systems. These solutions allow banks and other institutions to connect their blockchain through the well-known Swift network without expensive upgrades or changing current procedures.
The project is based on tokenized assets use cases previously demonstrated by Swift, ChainLink and UBS, at the 2024 Project Guardian of the Monetary Authority of Singapore (MAS).
UBS pilots turn into tokens
The first real use of this solution was tested with UBS tokenization, the tokenization arm of UBS, one of the world’s largest private banks, managing over $6 trillion.
The exam involved buying and selling shares in tokenization funds through ISO 20022 messages sent using CRE and Swift systems. When CRE received a Swift message from an old setup on UBS, it started fund subscription and redemption processes on the blockchain using the ChainLink Digital Transfer Agent (DTA) standard. This approach allows banks to continue using existing identity and security systems, but also gain the advantages of blockchain speed, automation and transparency.
Simplify tokenized asset workflows
By using CRE to hide the technical difficulties of using tokenized assets, this development goes far beyond the original concept. Financial institutions can use the same system, but they are already familiar and use simple Swift messages to launch various blockchain events. This type of global fund industry is worth over $100 trillion.
With this plug-and-play setup, institutions can fully benefit from the blockchain capabilities of tokenized fund workflows, including improved risk management, increased efficiency, simpler integration, and stronger operational controls.
Pilots are also tackling old problems in the global mutual fund market, with stock purchases and redemptions often facing delays, high costs and too much manual work. This solution will help cash settle off-chain through Swift’s network, while tokenized fund workflows run on the blockchain.
This will allow the process to be more transparent and monitored, eliminating the need for laborious settlements and manual compliance checks, allowing transactions to be speeded, reduced risk and increased liquidity in tokenized asset markets. ChainLink co-founder Sergey Nazarov calls it a milestone. This is because smart contracts can help transfer agents and other financial players adopt product lifecycle management on the chain.
ChainLink’s global role is growing
Leading financial institutions and protocols, including Swift, Euroclear, MasterCard, Fidelity International, ANZ, UBS, Aave, GMX and Lido, are already using ChainLink’s protocol stack globally. It serves as an industry standard Oracle platform and offers advanced blockchain applications such as reliable data, interoperability, compliance, privacy loan payments, stable coins, and tokenized assets.
The announcement illustrates the growing collaboration between large financial institutions such as ChainLink, Swift, and UBS. From asset tokenization of MAS’s Project Guardians to full-scale integrations that allow real financial institutions to connect to blockchains with minimal disruption, their work has progressed through many pilots and projects.
This development is a major step towards making digital asset workflows popular. It also depicts a future where blockchain and traditional finance will function smoothly.
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