UBS & OSL Launch Innovative Tokenized Warrant On Ethereum

In a groundbreaking move, UBS, a Swiss multinational bank, and OSL, a cryptocurrency exchange, have collaborated to tokenize an investment warrant on the Ethereum blockchain. The warrant is based on the shares of Xiaomi Corporation, a leading Chinese smartphone maker.

The tokenized warrant was announced on Feb. 7, 2024, and was sold to the OSL Exchange after being minted on the Ethereum network. The warrant is an options call, which gives the holder the right to buy Xiaomi shares at a specified price and date.

The tokenization of the warrant is a novel way of leveraging the blockchain technology to create new opportunities and efficiencies in the financial sector. According to OSL CEO Patrick Pan, the tokenization process simulates the entire life cycle of the warrant, from creation to redemption, and allows for automated and transparent transactions. He said:

We are simulating the whole product life cycle of an equity-linked structured product token, from token mint, through simulated secondary market transactions, and finally to token burn at maturity.

Winni Cheuk, head of sales at UBS Global Markets, also praised the tokenized warrant as a product that “enhances transparency, reduces transaction fees, streamlines settlement processes, and allows for more flexible trading hours.”

UBS developers explained that the tokenization of financial derivatives has several advantages over traditional methods, such as opening up new access channels, improving efficiency, and providing transparency via the immutable blockchain ledger. They wrote, “Tokenized warrants utilize smart contracts that allow automation, streamline trading and administrative processes, and lower handling costs.”

Ethereum: Tokenization Initiatives By UBS & OSL

Both UBS and OSL have considerable experience in the realm of asset tokenization. UBS has been researching tokenization since 2015 and has previously issued multiple tokenized products. In 2022, UBS launched a $50 million tokenized fixed rate note for its Asia Pacific clients through its UBS Tokenize platform. In 2023, UBS issued 200 million Chinese yuan ($28 million) worth of digital structured notes on the Ethereum blockchain in Hong Kong.

OSL, on the other hand, is a leading cryptocurrency exchange that offers trading, brokerage, custody, and asset management services. OSL is also exploring the possibility of tokenizing retail fund products, as revealed by Patrick Pan in an interview with Cointelegraph last month. He said that the firm is working on a Fund Token initiative that would allow investors to access a variety of fund products through tokenization.

Moreover, the tokenized warrant on Xiaomi shares is a testament to the innovation and collaboration of UBS and OSL, and a sign of the growing adoption and potential of blockchain technology in the financial industry.

Related Reading | Canadian Crypto Dominance: A Two-Year Streak As Fintech Investments Soar

The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.

Comments (No)

Leave a Reply