Singapore’s MAS created the report with 11 banking giants to run several pilots improve market issuance by tokenizing assets.
The Monetary Authority of Singapore (MAS) is proposing a framework to develop open and interoperable networks for tokenizing assets. On Monday, the central bank published a report containing details of its proposal, called Project Guardian.
The publication states that the MAS is already collaborating with 11 organizations working to develop and test tokenization across multiple asset categories. The test will feature foreign exchange, fixed income, and wealth management asset classes powered by a few financial services companies.
Interestingly, the MAS is not very supportive of most cryptocurrencies because of their highly speculative nature. However, the central bank said it is interested in the benefits obtainable from the digital asset world. According to MAS deputy managing director of markets and development Leong Sing Chiong, “while MAS strongly discourages and seeks to restrict speculation in cryptocurrencies, we see much potential for value creation and efficiency gains in the digital asset ecosystem.”
Some of the banks part of the initial testing and proposal are DBS, Standard Chartered, Citi, and HSBC. Standard Chartered is already working on a platform that develops asset-backed tokens for trading on the Singapore Exchange. Speaking on the pilot, Standard Chartered’s global head of trade and working capital, Kai Fehr, said the test has already confirmed the advantages available to investors. According to Fehr, “the initial pilot trade conducted in collaboration with Singapore Exchange and Linklogis proves the viability of assets-backed tokenization as an innovative originate-to-distribute structure, and the potential opportunities it presents to investors to participate in financing real-world economic activity.”
Further Details of Singapore’s Project Guardian Framework for Tokenizing Assets
In addition to the participating banking giants, the MAS developed the report with the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructure (CPMI).
As part of the project, HSBC, Marketnode, and UOB, have concluded a technical pilot for issuing a digitally native structured product. MAS says this pilot proves that the structured product chain can offer faster issuance and settlements at lower costs.
Another pilot carried out by UBS Asset Management explores Variable Capital Company (VCC) fund issuance on digital asset networks. The aim of this pilot is to improve trading VCC fund shares on the secondary market.
Furthermore, DBS Bank, UBS AG, and SBI Digital Asset Holdings are working on a repurchasing agreement with digital bonds. This is to introduce more flexibility, efficiency, and speed for cross-border distribution and settlement.
Singapore’s CBDC Project
The MAS’ general reluctance toward CBDCs has not kept it from exploring non-speculative digital currencies. Singapore joined several countries working on central bank digital currencies (CBDCs) and completed the first phase of its CBDC project. Called Project Orchid, the MAS initially began working on it in November 2021.
Project Orchid set out to examine the design and technicalities of a CBDC system in Singapore. The central bank also examined how well a CBDC would function with existing payment frameworks. The bank revealed:
“Though MAS has assessed that there is non urgent need for a retail CBDC in Singapore at this point in time, MAS seeks to facilitate ongoing learning and advance the financial infrastructure in Singapore.”
At launch, the MAS called Project Orchid a “multi-year, multi-phase exploratory project” without providing a time frame.