Why utilizing is 10x more important than tokenizing MMF?

Last week was particularly busy for tokenization space. There were 5 announcements about the development or the launch of tokenized MMF, including 3 from institutional players.

1. UBS Asset Management launched its first tokenized investment fund, the UBS USD Money Market Investment Fund, on Ethereum. The fund will be domiciled in Hong Kong serving the APAC region with DigiFT as the distributor.
2. Citi and Fidelity International have developed a solution that combines a tokenized money market fund (MMF) with an embedded digital FX swap significantly simplifying and streamlining foreign investors’ investment process in USD denominated tokenized securities.
3. Libeara, a SC Ventures backed tokenization platform, announced collaboration with FundBridge Capital, an MAS-regulated platform provider for fund managers, to launch a USD MMF Fund. Wellington Management Singapore will act as sub-manager for the Fund.

Of course given UBS Asset Management’s size ($1.7T AUM) and the production-ready nature of its product, many were busy shouting about the issuance of such a tokenized MMF.?

However, there is a much more significant milestone related to UBS that nobody highlighted. Instead of focusing on the issuance of a tokenized MMF, of which there are more than 38 already in the market, I was much more excited about how UBS utilized its tokenized JPY bond issuance a year ago.

As I mentioned numerous times before, tokenized MMF as a buy and hold asset is as useful as a rock to traditional investors given all the extra hurdles and costs?involved. But the moment additional utilities are unlocked for the investors, the tokenized MMF becomes a 10x solution for investors vs traditional MMF.

In this issue of Weekly Research, I will take you through a case study of how a tokenized bond (this can be easily substituted for tokenized MMF or any other asset) from the UBS was used to unlock ADDITIONAL utilities.

Let’s dig in.

In late 2023, UBS, DBS and SBI did a transaction using UBS tokenized JPY bond as the collateral for a repo trade spanning Switzerland, Singapore and Japan. The entire lifecycle of the trade was onchain, without the use of a central security depository (CSD).?

Here is the full lifecycle of the transaction.

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