The transaction between DBS, UBS, and SBI, which was carried out as an element of MAS’ Project Guardian, demonstrates how blockchain technology improves liquidity management for institutions by enabling adaptable, and affordable cross-border distribution and settlement of capital market instruments.
Employing regulated digital payment tokens, the transaction seamlessly finalised a repo, digital bond purchase, and redemption among regulated businesses situated in three distinct jurisdictions (Japan, Singapore, Switzerland).
In addition, the deal comprised a repo to borrow tokenised Japanese Yen (JPY) against a natively issued digital bond denominated in JPY.
The acquired tokenised JPY was applied to finance the bond’s purchase.
The subsequent digital bond redemption and payment of principal and interest at maturity was also completed on-chain, proving the ability of a public blockchain to encompass a whole transaction lifecycle.
Mike Dargan, UBS Group chief operations and technology officer stated: “With this pioneering transaction, we proved the feasibility of executing a fully automated and instantly settled transaction across several jurisdictions by leveraging a public DLT network under a strict compliance framework. The flexible nature of our UBS Tokenise service, allowed our partners to easily adapt and leverage our innovative product framework and technology capabilities, to their infrastructure and transaction needs.”
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This deal showed how financial markets may profit from continuous settlement, efficient operations and capital while maintaining security and regulatory standards.
A technical prototype for the production and distribution of a tokenized Variable Capital Company (VCC) fund on a permissioned Ethereum network was completed in 2023 by UBS Asset Management in partnership with SBI Digital Markets as part of Project Guardian.
Integrating public and private blockchain networks to improve fund issuance and distribution is the main goal of UBS’s global distributed ledger technology strategy, which includes the pilot.
Moreover, it contributes to the wider development of UBS Tokenise’s tokenisation offerings.
Fernando Luis Vázquez Cao, chief executive officer of SBI Digital Asset Holdings added: “At SBI Digital Asset Holdings (SBI DAH), we are building an institutional grade digital asset ecosystem and are ready for its commercialisation. This ground-breaking transaction demonstrates what can be done in Japan and cross-border, in providing innovative and efficient products and services to the market and clients. It is also an example of the strength of partnerships SBI DAH has with large global institutions and across the SBI group, with SBI SECURITIES as counterparty to the repo transaction and Shinsei Trust & Banking as the issuer of JPY stablecoin.”