Singapore’s Central Bank Proposes Framework for Interoperable Digital Asset Networks

Singapore’s central bank, the Monetary Authority of Singapore (MAS), has proposed a framework for creating open and interoperable networks for tokenized digital assets. The proposal, titled “Project Guardian,” was presented in collaboration with financial institutions including the Bank for International Settlements (BIS). The goal of the project is to test asset-tokenization across a variety of financial asset classes, including fixed income, foreign exchange, and wealth management. Eleven institutions have been enlisted to participate in pilot studies, including HSBC, Standard Chartered, DBS, and Citi.

Standard Chartered, one of the participants, is developing an initial token offering platform to issue asset-backed security tokens listed on the Singapore Exchange. The bank will be working with payments platform Linklogis. “The initial pilot trade conducted in collaboration with Singapore Exchange and Linklogis proves the viability of assets-backed tokenization as an innovative originate-to-distribute structure, and the potential opportunities it presents to investors to participate in financing real-world economic activity,” said Kai Fehr, global head of trade and working capital at Standard Chartered in a statement.

While Singapore’s central bank remains cautious when it comes to cryptocurrencies and the crypto ecosystem, it has stated its commitment to promoting the technologies of the industry to improve existing traditional financial systems. MAS’ deputy managing director of markets and development, Leong Sing Chiong, made the statement that while MAS strongly discourages and seeks to restrict speculation in cryptocurrencies, they see much potential for value creation and efficiency gains in the digital asset ecosystem.

MAS has also proposed standards for the use of digital money, including central bank digital currencies (CBDCs) and stablecoins. Last week, the MAS unveiled this new set of standards which includes collaborations with companies such as Amazon and Grab who are currently running trials.

The proposed framework presents significant potential for the growth of tokenization as an alternative to traditional finance and securities, and serves as an indication of Singapore’s willingness to embrace innovative technologies to create efficiencies within the financial industry.