UBS, SBI, and DBS have achieved a groundbreaking milestone by conducting the world’s first live repurchase transaction (repo) with a natively-issued digital bond on a public blockchain. This revolutionary transaction automatically and instantly settled a repo, digital bond purchase, and redemption using regulated digital payment tokens across entities in Japan, Singapore, and Switzerland.
Part of the Monetary Authority of Singapore‘s (MAS) Project Guardian, this transaction showcases the power of blockchain technology to facilitate cross-border distribution and settlement of capital market instruments in a highly efficient, flexible, and cost-effective manner. The collaboration among UBS, SBI, and DBS highlights the potential of blockchain to enhance liquidity management for institutions.
The repo involved borrowing tokenized Japanese Yen against a JPY-denominated natively-issued digital bond. The borrowed tokenized JPY was then used to finance the purchase of the same bond. The subsequent digital bond redemption, including the payment of principal and interest at maturity, was executed on-chain. This demonstrates the capability to cover an entire transaction lifecycle on a public blockchain.
Mike Dargan, UBS Group Chief Operations and Technology Officer, emphasized the feasibility of executing a fully automated and instantly settled transaction across jurisdictions by leveraging a public Distributed Ledger Technology (DLT) network under a strict compliance framework. This marks a significant step in achieving operational efficiency and compliance while embracing blockchain technology.
Fernando Luis Vázquez Cao, CEO of SBI Digital Asset Holdings, stated that the transaction demonstrates the potential for providing innovative and efficient products and services in Japan and cross-border. He highlighted the strength of partnerships within the SBI group, with SBI Securities as the counterparty to the repo transaction and Shinsei Trust & Banking as the issuer of the JPY stablecoin.
The benefits of the transaction for financial markets include real-time 24/7 settlement, operational and capital efficiency, and adherence to compliance and security requirements. As part of Project Guardian, UBS Asset Management collaborated with SBI Digital Markets to conclude a technical pilot for the issuance and distribution of a tokenized Variable Capital Company (VCC) fund on a permissioned Ethereum network.
This pioneering effort is part of UBS’s global distributed ledger technology strategy, focusing on leveraging public and private blockchain networks for enhanced fund issuance and distribution. It contributes to the broader expansion of UBS’s tokenization services through UBS Tokenize.
The transaction and broader participation in Project Guardian showcase the institutional-grade digital asset infrastructure developed by SBI DAH, including SBI Digital Markets, AsiaNext, SBI Zodia Custody, and SBI Security Solutions. SBI DAH aims to bring innovation to the financial industry by building an ecosystem for the issuance, custody, management, and liquidity of digital assets.
DBS, a leading financial services group in Asia, has played a crucial role in this milestone. With its presence in 19 markets and a strong commitment to leveraging digital technology, DBS has contributed to making this cross-border blockchain transaction a reality.
About UBS
UBS is a leading global wealth manager, the leading universal bank in Switzerland, and provides diversified asset management solutions and focused investment banking capabilities. With the acquisition of Credit Suisse, UBS manages $5.5 trillion of invested assets as of the second quarter of 2023.
About SBI Digital Asset Holdings and the SBI Group
SBI Digital Asset Holdings oversees and operates digital asset-related businesses under SBI Holdings, Inc. It aims to bring innovation to the financial industry by building an ecosystem for the issuance, custody, management, and liquidity of digital assets. The SBI Group is a leading financial conglomerate based in Japan, with core businesses including Financial Services, Asset Management, and Biotechnology-related activities.
About DBS
DBS is a leading financial services group in Asia, headquartered and listed in Singapore. Recognized for its global leadership, DBS has been named “World’s Best Bank” and “World’s Best Digital Bank” by various organizations. DBS provides a full range of services in consumer, SME, and corporate banking and is committed to shaping the future of banking through digital technology.
Photo by Ray ZHUANG on Unsplash
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