The Monetary Authority of Singapore (MAS) has escalated its efforts to expand its asset tokenization initiatives under Project Guardian. This move aims to catalyze the institutional adoption of digital assets, with the aim of unleashing liquidity, unlocking new investment opportunities and improving the efficiency of financial markets.
A major advance in this effort is the launch of five additional industry pilots under Project Guardian, involving 17 financial institutions. These pilots explore applications ranging from the efficient execution of bilateral digital asset transactions by Citi, T. Rowe Price Associates and Fidelity International to BNY Mellon and OCBC’s trial of a cross-border FX payments solution. Ant Group’s treasury management solution, aimed at improving global liquidity management, and Franklin Templeton’s exploration of a tokenized money market fund further illustrate the innovative spirit of these initiatives.
MAS collaborations and partnership pilots.
JP Morgan and Apollo’s partnership in using digital assets for investing and managing discretionary portfolios stands out as a significant step toward automated portfolio rebalancing and customization at scale. These developments highlight the potential for time savings and reduction of manual processes in asset management, and demonstrate the transformative impact of digital assets on financial operations.
Complementing these pilots, MAS’s launch of a new funds workflow focuses on self-issuing Variable Capital Company (VCC) funds on digital asset networks. This ambitious project, working in partnership with the Accounting and Corporate Regulatory Authority (ACRA), aims to address key tax, policy and legal considerations while broadening distribution channels for asset managers.
In infrastructure, MAS is working with international policymakers and financial institutions such as BNY Mellon, DBS, JP Morgan and MUFG on the Global Layer One (GL1) initiative. GL1 aims to establish an open digital infrastructure for hosting tokenized financial assets and applications. This infrastructure aims to enable seamless cross-border transactions and enable the trading of tokenized assets in global liquidity pools.
In addition to GL1, MAS is developing the Interlinked Network Model (INM), a framework for exchanging digital assets over independent networks. This model, detailed in the recently published whitepaper ‘Interlinking Networks’, is a crucial step in enabling financial institutions to transact without being on the same network.
The inclusion of the International Monetary Fund (IMF) in Project Guardian’s policy group further underlines the global reach and significance of these initiatives. The IMF’s role will provide an international perspective on policy and legal issues critical to cross-border platform cooperation and maintaining the stability of the international monetary system.
What is Project Guardian?
Inaugurated in May 2022, Project Guardian marked a pivotal point for MAS in its quest to leverage the value of asset tokenization. Within its first few months, the project saw its first live transactions in decentralized finance applications in the wholesale finance markets. The milestone demonstrated the tangible progress and potential of MAS’s vision in the evolving financial world.
An important aspect of Project Guardian is its focus on open, interoperable networks. The MAS published a detailed monograph entitled ‘Project Guardian: Open Interoperable Networks’, which outlines the vision, principles and architectural designs required for such networks in the digital asset domain. This publication takes a closer look at the benefits, challenges and critical regulatory and governance frameworks to support these networks.
As MAS Deputy Director Mr. Leong Sing Chiong asserted, the success of Project Guardian’s sector pilots in demonstrating the viability of tokenized financial assets has laid the foundation for realizing the full potential of tokenized markets. He said,
“Project Guardian’s sector pilots have successfully demonstrated that tokenized financial assets such as fixed income, currencies and asset management products can be traded, distributed and settled seamlessly across borders.”
He noted that establishing scalable digital infrastructures such as GL1 and INM will provide fundamental support and unify markets according to principles of openness and accessibility, similar to the public Internet.
By fostering collaborative innovation, embracing new technologies and integrating global perspectives, MAS is revolutionizing Singapore’s financial landscape and perhaps setting a benchmark for the international financial community.
