The Monetary Authority of Singapore (MAS) has unveiled plans to collaborate with the financial industry. This aims to broaden asset tokenization initiatives and build foundational capabilities to scale tokenized markets. This initiative is known as Project Guardian. It seeks to drive institutional adoption of digital assets, ultimately enhancing liquidity, unlocking investment opportunities, and improving the efficiency of financial markets.
Expansion of Asset Tokenisation Initiatives
Under Project Guardian, a consortium of 17 financial institutions (FIs) has launched five new industry pilots to explore potential asset tokenization use cases. These initiatives could pave the way for integration across the entire capital markets value chain, including listing, distribution, trading, settlement, and asset servicing. Notable participants include Citi, T. Rowe Price Associates, Inc., and Fidelity International. These participants are testing mechanisms for pricing and executing bilateral digital asset trades efficiently.
Other trials involve BNY Mellon and OCBC experimenting with a cross-border FX payment solution. Ant International is exploring a treasury management solution for global liquidity management, and Franklin Templeton is examining the issuance of a tokenized money market fund through a Variable Capital Company (VCC) structure. Additionally, J.P. Morgan and Apollo are collaborating on using digital assets to streamline investment and management processes, enabling automated portfolio rebalancing and customization at scale.
Focus on Funds Workstream
Responding to increased interest from the fund’s industry, MAS is launching a funds workstream within the Project Guardian industry group. This workstream will concentrate on the native issuance of Variable Capital Company (VCC) funds on digital asset networks, addressing tax, policy, and legal considerations while expanding distribution channels for asset managers.
Collaboration with the Accounting and Corporate Regulatory Authority (ACRA) is planned to assess the opportunities and risks of adopting digitally native VCC fund shares.
Launch of Digital Infrastructure Initiatives
MAS is collaborating with international policymakers and financial institutions, including BNY Mellon, DBS, JP Morgan, and MUFG. It is to explore the development of an open, digital infrastructure named Global Layer One (GL1).
GL1 aims to host tokenized financial assets and applications, facilitating seamless cross-border transactions and enabling the trading of tokenized assets across global liquidity pools while adhering to relevant regulatory requirements and guidelines. The involvement of public-private stakeholders ensures the establishment of foundational digital infrastructures aligned with international standards.
Interlinked Network Model (INM)
In conjunction with the financial industry, MAS is working on the Interlinked Network Model (INM), serving as a common framework for exchanging digital assets across independent networks. This model allows financial institutions to transact with each other without the requirement for all parties to be on the same network.
A whitepaper titled “Interlinking Networks” has been released, detailing the practical application of INM and its design considerations, jointly developed in collaboration with financial institutions, FinTechs, and industry groups.
International Collaboration with the IMF
The International Monetary Fund (IMF) has joined Project Guardian’s policymaker group, consisting of representatives from Japan, Singapore, Switzerland, and the UK. The IMF’s inclusion provides an international perspective on policies and legal issues, facilitating cooperation around cross-border platforms and ensuring the stability of the international monetary system.
Mr. Leong Sing Chiong, Deputy Managing Director (Markets and Development) at MAS, expressed optimism, stating, “Project Guardian’s industry pilots have successfully demonstrated that tokenized financial assets can be traded, distributed, and settled seamlessly across borders. To fully realize the potential of tokenized markets and achieve network effects, a scalable digital infrastructure is needed. GL1 will provide a foundational digital backbone and bring markets together with similar principles of openness and accessibility as the public internet. MAS welcomes additional policymakers and financial institutions to participate in the design phase of the GL1 initiative and contribute towards its development.”