Singapore Starts Digital-Asset Initiative

Singapore has begun a project to investigate potential uses of asset tokenization as the city state looks to establish itself as a hub for decentralized finance after several key crypto players left. “Project Guardian,” a collaboration between the Monetary Authority of Singapore and the finance industry, will test the feasibility of applications in asset tokenization and decentralized finance (DeFi) while working to manage risks to financial stability and integrity, according to a statement from Deputy Prime Minister Heng Swee Keat on Tuesday.

The project aims to develop and pilot use cases in areas including open, interoperable networks; trust anchors; and institutional-grade DeFi protocols. The first pilot in the project will explore potential DeFi applications in wholesale funding markets. The pilot, led by DBS Bank, JPMorgan Chase and Marketnode, involves the creation of a permissioned liquidity pool comprising tokenized bonds and deposits. The MAS was relatively early among regulators to look at uses of blockchain technology, and Singapore set up a licensing regime a few years ago. However, applicants have been frustrated by the slowness of approvals, and a crypto advertising ban caught the industry off guard.