MAS collaborates with Japan's Financial Services Agency on Project Guardian, with 11 financial institutions piloting cross-border digital asset transactions.
The Monetary Authority of Singapore (MAS) and the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) have collaborated to jointly release "Project Guardian" – Achieving an Open and Interoperable Network, which proposes a framework for designing open and interoperable networks for digital assets to facilitate digital asset transactions across networks and liquidity pools. The framework considers core principles of financial market infrastructures, with several financial institutions demonstrating progress in pilot projects.
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Expanding Project Guardian Pilot Scope
The Monetary Authority of Singapore (MAS) announced Project Guardian in May 2022, a plan that involves collaborating with financial industry players to explore applications of decentralized finance (DeFi) and asset tokenization. The first batch of pilot transactions was completed in November last year, with DBS Bank, JPMorgan, and SBI Digital Asset Holdings conducting forex and government bond transactions on a liquidity pool that includes tokenized Singaporean and Japanese government bonds, as well as Japanese Yen and Singapore Dollar.
Now, MAS has expanded the pilot program to test the potential of asset tokenization in more financial asset classes and has formed an industry group. This group consists of 11 financial institutions conducting pilots in areas such as asset and wealth management, fixed income, and forex to explore the potential of asset tokenization.
The report also shared the results of many financial institutions' pilot projects:
HSBC, Marketnode, and OCBC Bank have successfully completed a technical pilot on domestic digital structured products issuance and distribution. Placing all pilot participants in the structured product chain to reduce issuance and service costs, shorten issuance and settlement times, and verify broader customization and distribution potential.
UBS Asset Management is launching an experiment to directly issue Variable Capital Company (VCC) funds on a digital asset network. The aim is to enhance fund distribution, facilitate trading of VCC fund shares on the secondary market, and improve operational efficiency for the entire industry.
Standard Chartered Bank collaborated with Linklogis to develop an initial token issuance platform to facilitate the issuance of asset-backed securities tokens listed on the Singapore Exchange.
DBS Bank, SBI Digital Asset Holdings, and UBS are conducting a pilot on repo agreements for domestically issued digital bonds. The goal is to achieve greater flexibility, operational efficiency in cross-border distribution and settlement, and faster settlement speeds and efficiency.
Citi is testing pricing and executing digital asset transactions on a distributed ledger to leverage distributed ledger data for improved post-trade reporting and analysis.
Japan's Financial Services Agency Joins Collaboration
The Financial Services Agency of Japan has become the first overseas financial regulatory body to join Project Guardian.
Leong Sing Chiong, Deputy Managing Director of Markets and Development at MAS, stated:
While MAS strongly opposes and seeks to curb speculative activities in cryptocurrencies, we believe there is significant value creation and efficiency improvement potential in the digital asset ecosystem. That is why we actively collaborate with the industry to promote a responsible and innovative digital asset ecosystem. As we enter the next phase of Project Guardian, we look forward to working with policymakers and industry practitioners to jointly develop effective frameworks to guide the sound development of the future financial network.
Mamoru Yanase, Deputy Director-General of the Strategic Development and Management Bureau at the Financial Services Agency of Japan, also remarked:
The development of decentralized financial ecosystems is becoming increasingly complex, necessitating responses to emerging risks. On the other hand, blockchain technologies, including Web3, may be powerful drivers of medium- to long-term innovation. We look forward to enhancing our knowledge in this area through collaboration with MAS, traditional financial institutions, and fintech companies.
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