The Good Tech Companies - Why KuCoin Is Letting Institutions Trade Crypto with UBS Tokenized Money Market Funds

Starting point is 00:00:00 This audio is presented by Hacker Noon, where anyone can learn anything about any technology. Why KuKoin is letting institutions trade crypto with UBS tokenized money market funds by Ashon Pondi. Can a traditional money market fund become collateral for crypto trading? Kucoin has announced that it will now support UBSUMINT, the first tokenized money market investment Fund launched by UBS asset management and distributed via DigiFT. This marks the first time a global cryptocurrency exchange has enabled institutional tokenholders to use UBSUMINT as collateral for trading digital assets. UBSUMINT is issued under UBS tokenize, the bank's in-house tokenization service, and

Starting point is 00:00:43 is built on the Ethereum blockchain. The fund invests in high-quality money market instruments, following a risk-managed framework. Through this arrangement, Ku-coin will allow token holders to mirror their RWA, real-world asset holdings with stable coin equivalence without transferring ownership. This lets institutions trade crypto while retaining the yields in custody of their traditional assets. The integration is designed for institutional participants who typically face liquidity constraints when dealing with tokenized traditional assets.

Starting point is 00:01:14 By using UBSUMINT as off-exchange collateral, institutions can potentially access broader trading opportunities while maintaining exposure to low-risk money market investments. How Ku-coin's collateral structure works. Under this system, the tokenized investment fund remains with a regulated third-party custodian. Ku-coin does not take custody of the underlying fund. Instead, it mirrors the value of the RWA holdings in stable coins, which can't then be deployed for trading across Ku-coin's digital asset offerings. B.C. Wong, CEO of Ku-coin, explained, greater than, this partnership with DigiFT to support the UBSUMINT token highlights a greater than significant step forward in exploring the viability and adoption of secure greater than

Starting point is 00:01:59 investments for a broader audience. It empowers institutions to unlock greater than tokenized traditional assets for seamless global trading. This setup addresses a growing need in digital finance, enabling secure, compliant ways to bridge traditional and blockchain-based markets. The arrangement reduces settlement risk, offers more flexibility for capital deployment, and allows institutions to generate yield on idle assets while engaging in crypto markets. Digif's role in tokenized RWA distribution, DigiFT, licensed by the Monetary Authority of Singapore, Moss, and granted approval in principle by the Hong Kong Securities and Futures Commission, SFC, acts as the authorized distributor of UBSUMINT.

Starting point is 00:02:44 Henry Zhang, CEO of DigiFT, said, Greater than the integration of the UBSUMINT token, which will enable token holders to use greater than their funds as collateral via Ku Coins mirroring program, exemplifies our greater than focus on enhancing capital efficiency across digital asset markets through greater than tokenized RWA's. DigiFT enables both subscription and redemption of UBSUMINT in stable coins and fiat, operating in a non-custodial manner. This flexibility is important for institutional clients who may have diverse operational setups,

Starting point is 00:03:19 including the use of their own custody wallet solutions. Why this matters for institutional digital asset markets, the significance of this move lies in the institutional markets growing interest in real-world asset tokenization. Money market funds like UBSUM-I-N-T are considered low-risk, highly liquid instruments in traditional finance. By enabling them to function as collateral in crypto markets, Ku-coin and Digi-S. are effectively extending the reach of tokenized RWA's beyond passive holding into active trading strategies. Institutions can now potentially reduce idle capital by reusing tokenized

Starting point is 00:03:55 assets as collateral. Maintain regulatory compliance by holding RWA's with licensed custodians, access liquidity without selling underlying investments. This could set the stage for other exchanges and asset managers to follow a similar model, creating a more interconnected financial ecosystem where traditional and digital asset markets share infrastructure. Final outlook. In my opinion, this initiative signals a practical use case for tokenized real-world assets that goes beyond marketing hype. Many RWA projects in the past have focused on issuance without providing clear utility. By enabling tokenized money market funds to be actively used as collateral, Kucoin and DigiFT are showing how RWAs can integrate into the existing market structure. The success of this

Starting point is 00:04:41 model will depend on several factors. One, adoption by large institutions, without significant institutional participation, the liquidity benefits may remain limited. Two, regulatory clarity. Both crypto exchanges and asset managers will need to navigate differing jurisdictions' rules on collateralization and asset custody. Three, scalability of the model. Extending this approach to other asset classes like bonds, equities, or real estate could be the real game changer. If executed well, this could be a blueprint for the broader convergence of traditional and digital finance. Don't forget to like and share the story. This author is an independent contributor publishing via our business blogging program. Hacker Noon has reviewed the report for quality,

Starting point is 00:05:26 but the claims here and belong to the author. Hashtag DiO thank you for listening to this Hacker Noon story, read by artificial intelligence. Visit hackernoon.com to read, write, learn and publish.

The Good Tech Companies - Why KuCoin Is Letting Institutions Trade Crypto with UBS Tokenized Money Market Funds

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