Singapore MAS and SGX Unveil Blockchain-powered Token Assets Settlements System

The system leverages the power of smart contracts also allowing for simultaneous asset swapping along with the corresponding payment.

Photo: Randy Tan Travelogue / Flickr

Photo: Randy Tan Travelogue / Flickr

The blockchain and crypto-friendly Asian country Singapore is taking several initiatives for a structured growth of tokenized assets. Singapore’s central bank – The Monetary Authority of Singapore (MAS), and the Singapore Exchange have joined hands to develop a blockchain-powered tokenized assets settlement system which can work on different blockchain networks.

Dubbed as Delivery versus Payment (DvP), the system leverages the power of smart contracts for settlement of tokenized assets. Furthermore, the system also allows for simultaneous asset swapping along with the corresponding payment. This will allow for instant payment upon the exchange of assets.

To commission this DvP settlements platform, MAS and SGX joined hands with Consulting firm Deloitte, Singaporean Tech giant Anquan, and U.S.-based securities platform Nasdaq. As we can see that the basic goal of the DvP system is to simplify post-trade processes while further shortening the settlement cycles.

The official announcement reads that the successful trial “demonstrated that financial institutions and corporate investors are able to carry out the simultaneous exchange and final settlement of tokenized digital currencies and securities assets on different blockchain platforms.”

All the parties associated with testing the DvP system said that the simultaneous execution of these activities allows for enhancing operational efficiency while reducing settlement risks. The trial also notes that the smart contract implementation for DvP will further enable consistent implementation of rights and obligations. This will help to boost the investor confidence while simultaneously reducing the compliance costs in the market.

Chief FinTech officer for the MAS, Sopnendu Mohanty, says that the blockchain technology and asset tokenization together are fuelling new innovation.

“This project has demonstrated the value of blockchain technology and the benefits it can bring to the financial industry in the short to medium term,” Mohanty said. “The concept of asset tokenization, as well as other learnings gleaned from this project, can potentially be applied to a broad spectrum of the economy, creating a whole new world of opportunities.”

DvP Settlements System – An Extension of Project Ubin

The blockchain-powered DvP project is an extension of Project Ubin. Ubin started two years back in November 2016 to explore the use of Distributed Ledger Technology (DLT) for clearing and settlements of securities and payments. The Ubin Project successfully completed phase 2 of its project last year in 2017. Moreover, it also released three software prototypes which can achieve payment processing in a decentralized manner while simultaneously preserving the transactional privacy.

“We are delighted to drive this important industry effort to accelerate innovation in the marketplace. Based on the unique methodology SGX developed to enable real-world interoperability of platforms, as well as the simultaneous exchange of digital tokens and securities, we have applied for our first-ever technology patent,” said Tinku Gupta, Head of Technology at SGX and Project Chair.

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