Chainlink has announced a collaboration with Swiss banking firm UBS to enable tokenized fund subscription and redemption workflows via SWIFT messaging. The innovation is powered by Chainlink’s newly introduced Chainlink Runtime Environment (CRE) and aims to lower the barrier for financial institutions to access on-chain infrastructure.
In its official statement, Chainlink stated that during the pilot run, UBS’s current systems sent ISO 20022-compliant messages over the SWIFT network through the pilot. CRE then received these messages and turned them into on-chain instructions. These commands start subscription or redemption transactions in the Chainlink Digital Transfer Agent (DTA) standard, which means that tokens are either minted or burned in tokenized fund smart contracts.
The result is that organizations can use blockchain-based funds without having to change their old systems for managing keys, identities, or other important things.
“I’m very excited about this landmark innovation we’ve achieved by leveraging Swift’s standards and UBS’ tokenized asset design, as we are showing how the use of smart contracts and new technical standards can enable transfer agents and other entities to manage tokenized asset workflows on-chain,” said Sergey Nazarov, Co-Founder of Chainlink. “UBS is demonstrating how the use of smart contract-based technologies can be used by financial institutions to more readily explore new types of product lifecycle composability.”
Chainlink’s dominant role
Chainlink has called the feature a “plug and play” bridge between smart contract workflows and traditional financial (TradFi) messaging. The announcement says that this integration makes it easier for institutions and service providers to connect with each other in a way that is familiar to them, while also getting rid of a lot of the problems that come with bridging the gap between old and new digital assets. For the global fund industry, which is worth more than $100 trillion, this kind of architecture could change everything by making things more efficient, open, and automated.
This is not the first collaboration among these firms. Earlier this month, DigiFT, Chainlink, and UBS partnered to automate Tokenized Funds in Hong Kong. The trio aims to automate fund operations, cutting errors and costs, while making it easier for investors to access funds. Hong Kong’s Cyberport Blockchain & Digital Asset Pilot Subsidy Scheme has given the green light to its joint project.
The goal of the partnership is to create a regulated blockchain-based system that will make it easier to automate and manage the distribution, settlement, and lifecycle of tokenized products. This could also help cut down on mistakes made by people and save a lot of money. This would also make it easier for investors to get these things.
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