Hong Kong Pilot Backs DigiFT, Chainlink, UBS in Automating Tokenized Funds

The collaboration brings together three key institutions. DigiFT, a licensed exchange platform that offers tokenization of real-world assets and regulated digital-asset services, holds licenses from both the Monetary Authority of Singapore and Hong Kong’s Securities and Futures Commission. Chainlink, best known for its oracle networks and decentralized infrastructure, is providing its Digital Transfer Agent (DTA) smart contract framework. UBS Tokenize, the in-house tokenization service of the global banking group, will issue tokenized products that integrate into this new automated framework.

At the core of the initiative is the ambition to build blockchain-based infrastructure that automates the subscription, redemption, settlement, and lifecycle management of tokenized investment products. Investors will be able to place subscription or redemption orders through DigiFT’s regulated distributor smart contracts, providing a compliant and secure entry point into the system.

These orders will then be processed by Chainlink’s Digital Transfer Agent (DTA) smart contracts, which record the transactions on-chain. Once recorded, the system triggers the appropriate actions, such as issuance, redemption, or other lifecycle events, directly on UBS tokenized product smart contracts. These contracts are designed to align with standards developed by the Capital Markets Technology Association, ensuring that operations follow established industry practices while gaining the efficiencies of automation.

The importance of the project lies in several areas. By aligning tokenized fund products with regulated smart contract standards in Hong Kong and building on DigiFT’s dual licensing across Singapore and Hong Kong, the collaboration is designed to meet institutional and regulatory requirements with greater reliability. Automating manual workflows such as subscription, issuance, redemption, and lifecycle events can reduce errors, speed up processing, lower cost burdens, and enhance transparency.

Another notable aspect is interoperability, with Chainlink’s Digital Transfer Agent framework aiming to support connectivity across different blockchains, a step toward seamless cross-platform and cross-border use of tokenized financial products. For Hong Kong, the project also represents a broader effort to strengthen its position as a global center for digital assets, backed by the Cyberport subsidy scheme which is encouraging innovation in blockchain applications.

The workflow of the project is designed for efficiency and clarity. Investor intent in the form of subscription or redemption orders will be placed through DigiFT’s distributor contracts. Chainlink’s DTA framework then ensures that the orders are validated and recorded on-chain. Based on this process, UBS’s tokenized product contracts will be updated automatically, whether through new issuances or redemptions. From end to end, the system reduces human intervention, minimizing the potential for error or delay while establishing a transparent record of each step in the process.

There are, however, challenges that must be considered. Regulation remains a complex factor. Although Hong Kong has advanced its digital-asset framework, fully integrating smart contracts into regulatory structures requires careful alignment and may involve adjustments if legal standards evolve. Technical security also remains critical, as smart contract bugs or vulnerabilities can undermine even the most carefully designed systems.

Investor education is another challenge: for tokenized products to gain broader acceptance, participants must have trust in the infrastructure and understand the risks as well as the benefits. Interoperability and scalability, while promising, also present difficulties when multiple blockchains and jurisdictions are involved, each with differing definitions, custody rules, and compliance expectations.

This initiative also highlights broader trends in global finance. Tokenization of real-world assets is widely regarded as a transformative development for the $132 trillion global asset management industry, with the potential to unlock liquidity, accessibility, and efficiency. The involvement of established institutions such as UBS illustrates growing confidence in blockchain’s practical role in regulated finance. At the same time, regulatory programs such as Hong Kong’s subsidy scheme show how governments are actively supporting innovation by encouraging projects that test new infrastructure in a supervised environment.

Executives from the participating organizations emphasized the significance of the initiative. Henry Zhang, Founder & Group CEO of DigiFT, noted: “Through this project, we are combining institutional partners, regulated infrastructure, and blockchain technology to build the next chapter of tokenized fund distribution—one that moves us closer to a truly open economy where financial products can interoperate seamlessly across borders and platforms.”

Fernando Vazquez, President, Capital Markets at Chainlink Labs, explained: “By integrating DigiFT’s regulated smart contracts and UBS’s tokenized product smart contracts with Chainlink’s Digital Transfer Agent framework, we’re enabling a transformative new model for institutional fund distribution.” Kevin Loo, Hong Kong CEO of DigiFT, added: “Hong Kong is rapidly emerging as a leading center for regulated digital assets, and our project’s selection under the Blockchain & Digital Asset Pilot Subsidy Scheme reflects DigiFT’s commitment to building long-term infrastructure in the city.”

The DigiFT-Chainlink-UBS collaboration marks an important step in bringing automated, regulated, and scalable tokenized fund operations into mainstream institutional finance, particularly in Asia. If successful, it could provide a template for how other jurisdictions integrate blockchain-based tokenization into regulated financial sectors, combining efficiency with compliance and trust.