In a recent update, the Monetary Authority of Singapore (MAS) unveiled its collaboration with the financial industry to propel asset tokenisation initiatives and build foundational capabilities for scaling tokenised markets.

The Project Guardian, aimed at institutionalising digital assets, seeks to enhance liquidity, unlock investment opportunities, and streamline financial markets.

Exploring Tokenisation Across Industries

Under Project Guardian, a consortium of 17 financial institutions (FIs) has launched five industry pilots to explore diverse asset tokenisation use cases. Notable initiatives include Citi, T. Rowe Price Associates, Inc., and Fidelity International testing institutional-grade mechanisms for efficient bilateral digital asset trades.

BNY Mellon and OCBC are trialling a cross-border FX payment solution, while Ant Group explores a treasury management solution for global liquidity enhancement. Franklin Templeton is delving into the issuance of a tokenised money market fund through a Variable Capital Company (VCC) structure, and J.P. Morgan and Apollo collaborate on digital assets for seamless investment management.

Diverse Applications in Financial Landscape

Responding to increased interest from the funds industry, MAS introduces a funds workstream within Project Guardian, focusing on the native issuance of Variable Capital Company (VCC) funds on digital asset networks. This aims to address tax, policy, and legal considerations, expanding distribution channels for asset managers.

Digital Infrastructure Initiatives for Global Markets

In collaboration with international policymakers and financial institutions like BNY Mellon, DBS, JP Morgan, and MUFG, MAS is exploring the development of an open, digital infrastructure named Global Layer One (GL1).

This initiative aims to facilitate cross-border transactions and enable trading of tokenised assets globally while complying with regulatory requirements.

Interlinked Network Model (INM) for Seamless Transactions

MAS is working with the financial industry to create an Interlinked Network Model (INM), a common framework for exchanging digital assets across independent networks.

This enables seamless transactions among financial institutions without the necessity for a shared network. A whitepaper, "Interlinking Networks," jointly developed with FIs, FinTechs, and industry groups, details the practical application and design considerations of INM.

International Collaboration for Stability

Welcoming the International Monetary Fund (IMF) staff to Project Guardian's policymaker group, MAS emphasizes the importance of international cooperation.

IMF's involvement will provide a global perspective on policies and legal issues, contributing to the stability of cross-border platforms and the international monetary system.

MAS Perspective on Tokenised Markets

Mr Leong Sing Chiong, Deputy Managing Director (Markets and Development) at MAS, highlights the success of Project Guardian's industry pilots in demonstrating the seamless trading, distribution, and settlement of tokenised financial assets across borders.

To fully leverage tokenised markets, a scalable digital infrastructure like GL1 is essential, providing a foundational backbone aligned with principles of openness and accessibility.

MAS's strategic collaborations and initiatives mark significant strides towards establishing a robust digital infrastructure and promoting the widespread adoption of tokenised assets in the global financial landscape.