UBS Tokenize

Tokenization brings the benefits of digitalization and blockchain technology to regulated financial assets. It has the potential to reimagine capital markets for issuers and investors.

As blockchain technology has evolved, UBS has developed UBS Tokenize as a full-service offer for digital asset services, opening the door to the world of decentralized finance to a broader range of market participants and bringing them closer together.

UBS Tokenize supports opportunities across origination, distribution, and custody, initially focusing on tokenization of bonds, funds, and structured products.

Innovative product framework

By taking regulated financial assets into the world of decentralized finance, we can provide tangible benefits across the full value chain. UBS Tokenize offers on-chain issuance capabilities, based on an innovative product framework and blockchain technology.

Blockchain and technology agnostic

Putting you in control and ensuring you are not dependent on a single technology framework. Being blockchain agnostic means UBS Tokenize’s open architecture seamlessly integrates to your existing systems and supports multiple Distributed Ledger Technology (DLT) networks.

Regulated products

As digital technologies potentially introduce new risks, ensuring regulatory compliance is key. The UBS Tokenize product framework enables you to customize the product that you bring into the decentralized world according to your compliance needs and requirements.

Institutional-grade offering

UBS’s deep-rooted position in financial markets means we’ve created a resilient and adaptable origination service to foster innovation. Equipped with best-in-class smart contract level governance, your products can access new audiences more efficiently while also benefiting from institutional-grade infrastructure and a wealth of expertise.

Issuers

Are you looking to expand the reach of your products and unlock opportunities for new audiences?

We offer:

The ability to take institutional-grade products to market through tokenized assets
Connectivity to an emerging investment community, creating additional opportunities to receive funding and fractionalize products to create greater accessibility
The option to leverage public and private blockchains based on your requirements, minimizing the need for investments in technical or development capabilities

Distributors

Do you sell funds, structured products, and other solutions to end investors?

We offer:

Regulated tokenization services underpinned by robust governance
Full transparency to help you meet your compliance and security needs
The option to leverage the blockchains based on your needs with minimal integration requirements

Investors

Are you looking for new investment opportunities?

We offer:

Access to digital products such as regulated tokenized funds, bonds, and structured products
An expanded universe of investments from multiple issuers accessible through a single digital channel
A secure and efficient service, backed by a robust set-up

Data providers

Are you looking to extend the reach of your data sets to new audiences?

You can profit from:

Providing data by interacting with smart contracts to create new product opportunities
Sharing information quicker through a secure and seamless system
Direct communication with other market participants

UBS Tokenize puts you in control. Based on your digital strategy, you can utilize the full service or just parts of it.

We offer:

Extensive knowledge of the market to support the design, documentation, and tokenization of assets

We offer:

Expert support to help initiate and issue assets on public and private blockchains
Flexibility to construct product frameworks specific to your business and operational requirements, minimizing dependence on external suppliers

You can benefit from:

Connection with new investor bases, benefiting from the network effects for selected internal and external distribution
Tokenization allows assets to be fractionalized into smaller tickets compared to traditional markets

You can benefit from:

Integrated custody / IT infrastructure
Selected third-party custodians when required

We understand our clients’ needs are evolving – and digital technology is key to creating more opportunities. UBS Tokenize supports you at every step, helping you to stay ahead of the game.

Innovative markets

Access new innovative markets

Our approach uses our wealth of knowledge and substantial expertise to support the creation and development of innovative strategies and products.

A resilient system

A resilient system

Moving away from the traditional situation of a single participant being the intermediary in the chain, a decentralized financial system minimizes disruption and errors, offering you a more resilient and robust system.

Automation

Smart contracts enable the automation of security lifecycle events. Encrypting contracts on the blockchain results in improving security, reducing the intermediary chain and lowering costs for the transacting parties.

Greater efficiency

Greater efficiency and lower entry barriers

UBS Tokenize benefits from a ‘single source of truth’, meaning there is no need for multiple manual inputs and separate registers and ledgers, which dramatically reduces operational risks. It also streamlines transactions by cutting out duplication, speeding up processes, and allowing monitoring from one portal.

Digital Asset Innovation Bank of the Year (Global)

Best Tokenized Real-World Asset Solution

Most impactful Tokenization use case

Joint report developed by the Monetary Authority of Singapore’s Guardian Fixed Income Industry Group. The report was led by UBS AG, in collaboration with Global Financial Markets Association (GFMA) and International Capital Market Association (ICMA).

Fixed Income FrameworkNovember 2024

UBS in partnership with our global client base, has long been at the cutting edge of applying the power of blockchain technology and digital assets.

First end-to-end tokenized fund workflow

UBS Tokenize and DigiFT showcased a live, in-production tokenized fund transaction that leverages the Chainlink Digital Transfer Agent (DTA) technical standard to complete the first-ever subscription and redemption request of a tokenized fund.

First tokenized investment fund – uMINT

Launch of first tokenized investment fund, a Money Market investment built on Ethereum distributed ledger technology.

First tokenized warrant

Launch of Hong Kong’s first-ever investment-grade tokenized warrant utilizing the on-chain issuance product framework offered by UBS Tokenize.

Launch and first tokenized structured note

UBS Tokenize went live with the first in production issuance of a tokenized structured note by Bank of China International. BOCI have continued to regularly issue using UBS Tokenize.

First tokenized VCC fund pilot

The first blockchain-native tokenized VCC fund pilot is launched in Singapore.

First cross-border repurchase transaction

UBS, SBI and DBS have launched the world’s first live repurchase transaction (repo) with a natively-issued digital bond leveraging UBS Tokenize. The transaction automatically and instantly settled a repo, digital bond purchase and redemption using regulated digital payment tokens, across regulated entities located in three different jurisdictions: Japan, Singapore, Switzerland.

Pilot project

USD 50 million tokenized fixed rate note sold to Asia Pacific clients through UBS Tokenize.

Conception of UBS Tokenize

Successfully completed extensive proof of concepts and initial transactions of FX and deposits using tokenization with our clients and external counterparts.

Expand all panels

What is a DLT blockchain?

Distributed ledger technology shares data between different computers or "nodes" which record data in a distributed and encrypted way.

A blockchain is a special type of a distributed ledger and structures data in so-called blocks and encrypts the data with modern cryptographical methods, before broadcasting the transactions to every node, which means every node on the network has an exact copy of the same data. A consensus mechanism is used to validate every piece of data that is entered and that every piece of data is unique.

A blockchain has 4 key features:

Data is, as with all distributed ledgers, stored across many computers (or nodes) with an identical copy of the data on every computer
Data is cryptographically secured
A consensus algorithm defines how participants in a blockchain come to an agreement on the state of the ledger (typical consensus protocols are proof of work and proof of stake)
Second generation blockchains added programmability features though smart contracts

Blockchains can also be configured to restrict which network participants can participate in consensus.

In a permissioned network, a central authority determines which parties are allowed to propose new blocks and to participate in finding consensus

In permissionless networks such as Bitcoin and Ethereum, there is no central power, and anyone is eligible to participate.

What are digital assets?

Digital assets are a digital representation of value on a distributed ledger. Almost any asset can be represented as a digital ‘token’, that can be all or part of the original asset. This can then be traded just as other traditional assets are bought and sold, with additional benefits of liquidity, efficiency, and security.

Transactions can be completed in near real time, rather than waiting for reconciliation – potentially transforming financial markets infrastructure.

Underlying digital assets is the technology known as blockchain. Blockchain allows information to be encoded, stored, and transferred securely in a digital environment. Data is not stored centrally but distributed across a network – it is sometimes referred to as a ‘distributed ledger’. This means information is not dependent on a single entity for security or functionality.

Cryptocurrencies are only a small part of this new universe. UBS has no active offering in crypto as this is still an emerging market segment and regulation across the globe still evolving and unclear.

What is tokenization?

Tokenization refers to assets that are created digitally and traded using blockchain technology. It consists of creating assets as digital tokens, allowing them to be issued, traded, and processed on blockchain networks.

All UBS Tokenized assets are created, originated, distributed, and held by regulated custodians. Tokenized assets provide participants with access to new marketplaces, faster settlement, and increased liquidity, and flexibility.

Digital asset transactions can be completed in near real time, representing a dramatic improvement in efficiency for many traditional asset classes that can take hours or days to reconcile. This makes for far more efficient markets, lowering costs and improving asset liquidity. Tokenization is also more flexible than traditional assets. Tokens can be issued as fractions of a larger asset. This can make asset classes with high minimum investments or low liquidity far more accessible to smaller investors, expanding the investable universe for these buyers and introducing issuers to new target markets.

How are products structured through UBS Tokenize?

How does a tokenized product benefit investors compared with traditional structures?

What are the key risks associated with interacting with tokenized assets?

Cryptographic tokens (or digital assets) based on the DLT are largely new and untested, and as such subject to known and unknown risks. These might include (but are not limited to) product risks, e.g., market, foreign exchange, credit, liquidity, or risks of using the Distributed Ledger Technology, e.g., legal, regulatory, compliance, operational failures, theft, fraud. In addition to the risks mentioned, there are other risks associated with the acquisition, storage, transfer and use of the digital token by potential investors, including risks that the participants may not be able to anticipate. Such risks may further materialize as unanticipated variations or combinations of the risks set out herein.

Why issue securities on a public blockchain?

The use of a public blockchain, as opposed to a permissioned private blockchain, can provide greater interoperability and connectivity across different market participants. This can provide users with access to more potential customers and service providers, improved opportunities to execute at the best price, and other operational efficiencies such as faster transaction times. However, there are cases when it is more favourable to use private permissioned blockchain and we recommend performing extensive due diligence on the outcomes you are trying to achieve before engaging with public or private blockchains.

Disclaimer:

This material has been issued by UBS AG and/or any of its affiliates ("UBS" and "we", "us"). The securities, derivatives or other financial instruments described herein ("Instruments") may not be eligible for sale in all jurisdictions or to certain categories of investors. This material is for distribution only under such circumstances as may be permitted by applicable law, rules and/or regulations. All communications between you and us may be monitored. Please see further details as set out under "Country-specific information" below. Provenance and purpose This material has been prepared by sales or trading personnel and it is not a product of our Research Department and is not intended to recommend, suggest or inform an investment strategy. Opinions expressed may differ from the opinions expressed by our other divisions, including those of the Research Department. Recipient to exercise own judgment The information contained herein should not be regarded by recipients as a substitute for the exercise of their own judgment. It has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient and does not constitute the provision of investment advice. Prior to entering into a transaction, you should consult with your own legal, regulatory, tax, financial and accounting advisers to the extent you deem necessary to make your own investment, hedging and trading decisions. Not an offer to transact This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any Instrument or to participate in any particular trading strategy. This material is not an official confirmation of terms. Conflicts of Interest This material may contain proprietary commentary produced in conjunction with our trading desks that trade as principal in the Instruments. This commentary may therefore not be independent from our proprietary interests or those of connected parties which may conflict with your interests. We may have accumulated or may acquire a long or short position in the subject Instrument, or derivative thereof, on the basis of this material prior to its dissemination. We may trade as principal or otherwise act or have acted as market-maker and/or as an execution venue in the Instruments. Instruments may be highly illiquid which may adversely impact the price, spread and speed of execution of orders in those Instruments. Furthermore, we may have or have had a relationship with or may provide or have provided investment banking, capital markets and/or other financial services to the companies associated with the Instruments. We have policies and procedures designed to manage conflicts of interest. In order to control the flow of information contained in one or more areas within UBS, into other areas, units, groups or affiliates of UBS, we may rely on information barriers. Additional information can be found at: ubs.com/ibterms. Contents of Material This material is prepared from information believed to be reliable, but we make no representations or warranties, express or implied, and owe no duties (including in negligence) as to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the Instruments, markets or developments referred to in the materials. The information contained in this material is as of the date hereof only and is subject to change without notice. We do not undertake any obligation to update this material. Any prices or quotations contained herein are indicative only and are not for valuation purposes. Past performance is not necessarily indicative of future results. Statement of Risk The Instruments are not suitable for all investors, and trading in these Instruments is considered risky and is appropriate only for sophisticated investors and in particular any target market identified herein. These Instruments may involve a high degree of risk and may be highly volatile in response to fluctuations in interest rates, foreign exchange rates and other market conditions. Some Instruments may be physically settled, or cash settled. No Liability To the fullest extent permitted by law, neither we nor any of our directors, employees or agents is liable for any loss (including indirect, special or consequential losses or damages, and even if we have been advised of the possibility of loss) arising out of any person’s use of, or reliance upon, the information contained herein. Securities Act Any Instruments that have not been registered under the United States Securities Act of 1933 may not be offered or sold in the United States except pursuant to an exception from the registration requirements of the Securities Act and applicable state securities laws and in such circumstances as may be permitted by applicable law. No redistribution or reproduction We specifically prohibit the redistribution or reproduction of this material in whole or in part without our prior written permission and we accept no liability whatsoever for the actions of third parties in this respect. Scenario Analysis The scenario analyses shown in this material are based on model-based valuation methodologies and the results provided by them may vary significantly depending (i) on the data used as inputs; and (ii) on the assumptions and other parameters embedded in the model, which are not the only ones that might reasonably have been selected. They are based in part on information and market data which may be subject to change. We are not under any obligation to update the analyses. The scenario analyses are illustrative only and present hypothetical performance analyses of the Instrument based on certain assumptions with respect to specific factors that may prove to be incorrect. They are not intended to predict actual results for the Instrument and actual results may differ substantially from those provided or projected. We make no representation or warranty, express or implied, as to the accuracy or completeness or fitness for use for any particular purpose of the analysis or calculation methodology used. You should review and understand the assumptions and evaluate whether they are appropriate for your purposes.

Country-specific information

Except as otherwise specified herein, these materials are distributed to professional clients only, and are not suitable for retail clients. For further important country-specific information, please see the following link: www.ubs.com/sales-and-trading-country-information

Innovative product framework

Blockchain and technology agnostic

Regulated products

Institutional-grade offering

Issuers

Distributors

Investors

Data providers

Origination

Tokenization and Issuance

Distribution