The Monetary Authority of Singapore (MAS) to Explore Asset Tokenization

Key Insights:

• Today, the Monetary Authority of Singapore (MAS) announced the launch of Project Guardian, a collaboration with financial institutions to explore asset tokenization.
• The Republic of Singapore is one of the more friendly crypto jurisdictions, with the MAS in favor of supporting innovation.
• Financial institutions involved in the project include JPMorgan Chase and Singapore’s DBS Bank.

Singapore and the Monetary Authority of Singapore (MAS) were back in the news today. A busy 2022 has seen competition amongst key jurisdictions heat up for the coveted spot of being ‘the world’s crypto hub.’

Several jurisdictions have imposed restrictions that limit the expansion of the digital asset space. Others, however, have taken a more innovative stance.

The key, however, remains to find the right balance between appropriate regulatory oversight and embracing innovation.

Singapore and the Monetary Authority of Singapore (MAS) have demonstrated support for innovation. Singapore’s central bank has also ensured the necessary level of oversight across the digital asset space.

Monetary Authority of Singapore Announces Launch of Project Guardian

On Tuesday, the Monetary Authority of Singapore (MAS) announced the launch of Project Guardian.

The MAS will collaborate with the financial industry to look into the value-add and the economic potential of asset tokenization.

Deputy Prime Minister and Coordinating Minister for Economic policies, Mr. Heng Swee Keat, officially launched Project Guardian at the Asia Tech x Singapore Summit on Tuesday morning.

According to the announcement,

“Project Guardian will test the feasibility of applications in asset tokenization and DeFi while managing risks to financial stability and integrity. MAS aims to develop and pilot use cases in four main areas.”

The main areas are,

• Open, interoperable networks.
• Trust anchors.
• Asset tokenization.
• Institutional grade DeFi protocols.

The announcement went on to say,

“The first industry pilot under Project Guardian will explore potential DeFi applications in wholesale funding markets. The pilot, led by DBS Bank Ltd., JP Morgan, and Marketnode, involves the creation of a permissioned liquidity pool comprising tokenized bonds and deposits. The pilot aims to carry out secured borrowing and lending on a public blockchain-based network through execution of smart contracts.”

MAS Chief FinTech Officer Sopnendu Mohanty said,

“MAS is closely monitoring innovations and growth in the digital asset ecosystem and working through the potential opportunities and risks that come with new technologies – to consumers, investors, and the financial system at large.”

Mohanty went on to say,

“Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital asset ecosystem. The learnings from Project Guardian will serve to inform policy markets on the regulatory guardrails that are needed to harness the benefits of DeFi while mitigating its risks.”

JPMorgan and DBS Bank Are no Strangers to Asset Tokenization

JPMorgan launched Onyx in 2020. Onyx is a “multi-asset blockchain network and platform that enables the exchange of value for different types of digital assets.”

Singapore bank DBS offers a range of digital asset services, including crypto trading that supports the trading of bitcoin (BTC) and other major cryptos. DBS also offers institutional-grade digital custody services.

The collaboration with the MAS demonstrates the relationship between established institutions and regulators and how it can benefit the digital asset space.