SINGAPORE, November 15, 2023 – The Monetary Authority of Singapore (MAS) today announced that it is working with the financial industry to expand asset tokenisation initiatives and develop foundational capabilities to scale tokenised markets. These developments under Project Guardian will catalyse the institutional adoption of digital assets, with the aim of freeing up liquidity, unlocking investment opportunities, and increasing the efficiency of financial markets.
Expand Asset Tokenisation Initiatives
Project Guardian’s industry group of 17 financial institutions (FIs) has initiated five additional industry pilots to test promising asset tokenisation use cases. This potentially paves the way for integration across the capital markets value chain including listing, distribution, trading, settlement, and asset servicing.
Citi, T. Rowe Price Associates, Inc. and Fidelity International are testing institutional-grade mechanisms to price and execute bilateral digital asset trades efficiently, and explore real-time post-trade reporting and analytics of digital asset trades.
BNY Mellon and OCBC are trialling a cross-border FX payment solution to enable secure, interoperable payment solutions across heterogenous networks.
Ant Group is trialling a treasury management solution to enhance liquidity management funding globally. This solution will enable real-time multi-currency clearing and settlement through their global treasury centre in Singapore which supports over 40 currencies.
Franklin Templeton is exploring the issuance of a tokenised money market fund through a Variable Capital Company (VCC) structure, which utilises digital asset networks to maintain the records of fund shares.
J.P. Morgan and Apollo are collaborating on the use of digital assets to enable more seamless investment and management of discretionary portfolios and alternative assets, automated portfolio rebalancing and customisation at scale. This will provide time savings and reduction in manual processes for asset servicing.
In response to strong interest from the funds industry, MAS is launching a new funds workstream within the Project Guardian industry group focused on the native issuance of Variable Capital Company (VCC) funds on digital asset networks. This workstream aims to address tax, policy and legal considerations while increasing distribution channels for asset managers. MAS will collaborate with the Accounting and Corporate Regulatory Authority (ACRA) to better assess the opportunities and risks of adopting digitally native VCC fund shares.
Mr Leong Sing Chiong, Deputy Managing Director (Markets and Development), MAS, said, “Project Guardian’s industry pilots have successfully demonstrated that tokenised financial assets such as fixed income, foreign exchange and asset management products can be traded, distributed, and settled seamlessly across borders. To fully realise the potential of tokenised markets, and achieve network effects, a scalable digital infrastructure is needed.”
Launch Digital Infrastructure Initiatives to Scale Tokenised Markets
MAS is collaborating with international policymakers and FIs including BNY Mellon, DBS, JP Morgan and MUFG to explore the design of an open, digital infrastructure that will host tokenised financial assets and applications. This new initiative, called Global Layer One (GL1), will facilitate seamless cross-border transactions and enable tokenised assets to be traded across global liquidity pools, while meeting relevant regulatory requirements and guidelines. The participation of public-private stakeholders will help ensure that foundational digital infrastructures are established in accordance with international standards.
MAS is also collaborating with the financial industry to develop an Interlinked Network Model (INM) which will serve as a common framework for exchanging digital assets across independent networks. This enables FIs to transact with each other without the need for all of them to be on the same network. A whitepaper, “Interlinking Networks ”, which details how INM may be applied in practice and the design considerations for its implementation was published today. The whitepaper was jointly developed in collaboration with FIs, FinTechs and industry groups.