SINGAPORE, November 4, 2024 – The Monetary Authority of Singapore (MAS) has unveiled a series of initiatives to bolster asset tokenisation within financial markets, targeting the commercialisation of tokenised assets and fostering a more robust financial infrastructure. The regulator’s plan includes forming commercial networks, developing cross-border market infrastructures, establishing industry frameworks, and enabling a common settlement facility for tokenised assets.
Building Liquidity through Commercial Networks
Under the “Project Guardian” initiative, MAS has brought together over 40 financial institutions, industry associations, and international policymakers across seven jurisdictions. Notable participants include ANZ, Deutsche Bundesbank, Fidelity, Northern Trust, Swift, and the World Bank. Through this collaboration, more than 15 industry trials across six currencies and various financial products—such as funds, fixed income, and foreign exchange—have been conducted.
In a push towards commercialisation, MAS has facilitated the establishment of the Guardian Wholesale Network, an industry group comprised of Citi, HSBC, Schroders, Standard Chartered, and UOB. This network aims to enhance liquidity for tokenised asset transactions by integrating products and services across multiple currencies and asset classes, potentially leading to advancements in capital raising, secondary trading, asset servicing, and settlement processes.
Developing Market Infrastructures for Cross-Border Transactions
MAS’s Global Layer One (GL1) initiative, launched in 2023, has laid the foundation for global digital infrastructure to support tokenisation in financial markets. GL1 has worked closely with major global banks—BNY Mellon, Citi, J.P. Morgan, MUFG, and Societe Generale-FORGE—to define the platform’s governance, legal, and technological requirements.
The initiative is now expanding to support a broader ecosystem for cross-border trading of tokenised assets, incorporating standardised governance controls and developing specifications for interoperability. In addition, the GL1 platform will implement a “compliance by design” approach, allowing regulatory and policy requirements to be programmed and enforced in real time. This expansion is set to include new partners, such as Euroclear and HSBC, as part of a newly established market infrastructure working group that will focus on digital asset securities control principles.
Industry Frameworks for Tokenised Asset Implementation
To encourage the widespread adoption of tokenised assets by financial institutions, MAS, in collaboration with Project Guardian members, has introduced two industry frameworks:
- Guardian Fixed Income Framework (GFIF): Built to guide tokenisation in debt capital markets, GFIF integrates standards from the International Capital Market Association, Capital Markets and Technology Association, and the Global Financial Markets Association.
- Guardian Funds Framework (GFF): This framework provides best practices for tokenised funds, offering a composable token taxonomy to streamline the development of tokenised investment vehicles that incorporate multiple asset types.
Enhancing Settlement Confidence with a Common Facility
MAS has also announced the rollout of a “common settlement facility” to support the settlement of tokenised assets, aiming to reduce market fragmentation and enhance security. The SGD Testnet will allow regulated institutions to conduct transactions in S$ wholesale central bank digital currency (CBDC) as a settlement asset, with potential for expansion to other digital currencies. Initial testing will include prominent banks such as DBS, OCBC, Standard Chartered, and UOB, with applications in payments and securities settlement.
Strong Industry Momentum
Commenting on the initiatives, MAS Deputy Managing Director (Markets and Development) Mr Leong Sing Chiong noted, “MAS has seen strong interest in asset tokenisation in recent years, notably in fixed income, FX, and asset management. We are encouraged by the keen participation from financial institutions and policymakers to co-create industry standards and risk management frameworks, paving the way for industry-wide adoption of tokenised markets.”
MAS’s latest efforts position Singapore at the forefront of financial innovation, with asset tokenisation expected to play an increasing role in the future of global financial markets.