First Industry Pilot for Digital Asset and Decentralised Finance Goes Live
2 Under the first industry pilot, DBS Bank, JP Morgan and SBI Digital Asset Holdings conducted foreign exchange and government bond transactions against liquidity pools comprising of tokenised Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD).
3 A live cross-currency transaction
4 DeFi enables financial transactions to be performed by entities directly with one another using smart contracts, without financial intermediaries. The live transactions executed under the first pilot demonstrate that cross currency transactions of tokenised assets can be traded, cleared and settled instantaneously among direct participants. This frees up costs involved in executing trades through clearing and settlement intermediaries, and the management of bilateral counterparty trading relationships as required in today’s over-the-counter (OTC) markets.
5 Oliver Wyman Forum
6 Since the announcement of Project Guardian in May 2022, MAS has engaged the financial industry to identify key areas for collaboration. These include:
- Carrying out industry pilots with financial institutions and FinTechs, in Singapore and other jurisdictions, to develop good asset tokenisation use cases for financial services. Such pilots allow the industry to identify opportunities to unlock economic value, and surface potential risk management issues.
- Studying regulatory and risk management implications of tokenised asset transactions, such as the regulatory treatment of tokenised liabilities and appropriate governance for institutional DeFi structures, to promote oversight and accountability.
- Developing technology standards to support interoperability across the digital asset ecosystems with the potential to facilitate cross currency transactions of tokenised assets globally. This involves first establishing a common identity and access framework supported by trust anchors
This ensures that participants trade only with verified counterparties, issuers and protocol developers.- regulated financial institutions that screen, verify and issue verifiable credentials to entities that wish to participate in the DeFi protocols.
- Trade Finance: Standard Chartered Bank is leading an initiative to explore the issuance of tokens linked to trade finance assets. The project aims to digitise the trade distribution market, by transforming trade assets into transferable instruments that are more transparent and accessible to investors.
- Wealth Management: HSBC and UOB are working with Marketnode
Marketnode, an SGX Group and Temasek joint venture, is a digital markets infrastructure provider.to enable native digital issuance of wealth management products, enhancing issuance efficiency and accessibility for investors.
8 MAS welcomes further proposals from the industry that addresses the key focus areas of Project Guardian - open interoperable networks, trust anchors, asset tokenisation, and institutional grade DeFi protocols. MAS invites interested parties to submit proposals to the FinTech Regulatory Sandbox
9 Mr Sopnendu Mohanty, Chief FinTech Officer, MAS, said, “The live pilots led by industry participants demonstrate that with the appropriate guardrails in place, digital assets and decentralised finance have the potential to transform capital markets. This is a big step towards enabling more efficient and integrated global financial networks. Project Guardian has deepened MAS’ understanding of the digital asset ecosystem and has contributed to the development of Singapore’s digital asset strategy. We look forward to working with more institutions to advance global learning on policies, standards, and best practices for digital asset regulation and responsible innovation.”