Transformative Chainlink Tokenized Fund Workflows Get SWIFT Integration for UBS

Key Takeaways

Chainlink has created a new system that integrates with Society for Worldwide Interbank Financial Telecommunications (SWIFT), allowing banks to manage Chainlink tokenized fund workflows with no infrastructure upgrades.
Union Bank of Switzerland (UBS) successfully piloted this solution, using standard ISO 20022 messages to trigger on-chain fund subscriptions and redemptions.
The goal of the breakthrough is to lower barriers to entry and leverage blockchain efficiencies to support the over $100 trillion global fund industry.

Connecting Traditional Financial Systems to Blockchain

Chainlink has taken a crucial step to drive institutional crypto adoption. The blockchain firm has unveiled a new framework that seamlessly integrates Chainlink tokenized fund workflows with the global Society for Worldwide Interbank Financial Telecommunications (SWIFT) messaging network.

Chainlink Tokenized Fund Workflows: A new pilot project developed with UBS shows how traditional banks can utilize their existing SWIFT messaging infrastructure to manage blockchain-based funds. — *Chainlink Tokenized Fund Workflows. (Source:* X)

The framework was successfully tested with Union Bank of Switzerland (UBS) to enable the management of tokenized assets with the existing ISO 20022 standards used by financial institutions for their traditional financial activity. The key innovation is there is no need to overhaul the underlying costly and complex infrastructure of traditional finance, as this is a plug-and-play bridge to the blockchain.

How the UBS Pilot Realized New Efficiencies

The technical proof-of-concept (PoC) showed that UBS was able to initiate subscription and redemption flows for a tokenized fund by sending a SWIFT message. This SWIFT message was received by the Chainlink Runtime Environment (CRE), and the CRE automatically initiated the corresponding on-chain activities using the new Chainlink Digital Transfer Agent (DTA) standard. This end-to-end automation from the Chainlink tokenized fund workflows reduces operational friction, improves transparency, and generates possibilities for programmable compliance.

Seamless Integration: Banks will continue to use existing SWIFT rails, which eliminates the need to manage new keys or make any changes to their existing systems.
Automated Execution: SWIFT messages automatically trigger on-chain smart contracts for fund operations.
In line with Regulations: The DTA standard has been specifically designed to work within existing financial compliance frameworks.

Read also: Goodbye CEXs: Mastercard’s 3.5B Cards Go Onchain with Chainlink’s Crypto Bridg

Opening the $100 Trillion Fund Industry

This is a potential tipping point for the gigantic global fund industry. This represents a familiar and trusted credential vehicle that will reduce the technical barriers for thousands of institutions to investigate the benefits of tokenization. The ability to streamline Chainlink tokenized fund workflows through established systems could lead to widespread adoption, bringing unprecedented efficiency and composability to asset management we have never seen before.

Summing Up

This successful pilot has hit a vital maturity point for tokenization activities, moving forward from a theoretical concept to a practical, interoperable solution for global finance.

Final Thought: So far, this collaboration answers the “how” for institutional blockchain adoption. The question now is not if legacy finance will migrate on-chain, but how quickly this new standard will become the new norm.

FAQs

What are tokenized funds?

Tokenized funds are conventional investment funds, like mutual funds, in a digital token format on a blockchain, enabling faster settlement and transparency.

What is the Chainlink Digital Transfer Agent (DTA)?

The Chainlink DTA is a new technical standard that establishes how transfer agents can manage the lifecycle of tokenized funds on a blockchain, including subscriptions and redemptions.

What is the Chainlink Runtime Environment (CRE)?

The CRE is part of the Chainlink platform that provides a secure way for off-chain systems, such as SWIFT, to connect to on-chain smart contracts, so they can interact and work together.

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