Singapore authorities report on interoperable digital asset networks
26 June 2023 Singapore
Image: adopbe/ghulam
The Monetary Authority of Singapore (MAS) has published findings of its research on designing open and interoperable networks for digital assets.
The report, , was issued in consultation with experts from the Bank for International Settlements Committee on Payments and Market Infrastructure.
This examines the progress of a series of industry pilot studies launched under its Project Guardian initiative, conducted in partnership with industry firms to test the viability of asset tokenisation and decentralised finance in financial services.
As part of these pilot studies, DBS Bank and SBI Digital Asset Holdings and UBS are working on a pilot repo transaction framework with natively issued digital bonds. The aim is to drive faster settlement, greater operational efficiency and more effective cross-border distribution for capital market instruments on digital asset networks.
HBSC, Marketnode and UOB have completed a technical pilot to test the issuance and distribution of a digital native structured product which, according to participants, illustrates potential to reduce issuance and service costs, to shorten the timeframe for issuance and settlement, and to offer greater opportunity for instrument customisation.
UBS Asset Management will launch a pilot study to evaluate digital native issuance of a variable capital company fund (VCC) on digital asset networks, providing opportunity to enhance distribution and secondary market trading for VCC funds.
Schroders is working with distributed ledger technology-based transaction network specialist Calastone to support a tokenised investment vehicle which can replicate and extend the benefits of traditional investment securities using VCCs.
Other pilot projects have focused on tokenisation of asset-backed securities, bonds and bank liabilities.
Standard Chartered has partnered with Linklogis to create an initial token offer platform supporting issuance of ABS tokens listed on the Singapore Exchange (SGX).
Citi is evaluating the pricing and execution of digital asset transactions on DLT, drawing on ledger data to enhance post-trade analytics and reporting.
MAS has confirmed that the Japan Financial Services Authority (FSA) has become the first overseas financial regulator to join Project Guardian, providing opportunity for the two financial supervisors to collaborate on digital asset innovation and best practice for asset tokenisation.
Commenting on this collaboration, Leong Sing Chiong, MAS deputy managing director for markets and development, says: 鈥淲hile MAS strongly discourages and seeks to restrict speculation in cryptocurrencies, we see much potential for value creation and efficiency gains in the digital asset ecosystem.
鈥淭his is why we are actively collaborating with the industry to foster a responsible and innovative digital asset ecosystem. As we enter this new phase of Project Guardian, we [will collaborate] with fellow policymakers and industry practitioners to jointly develop effective frameworks to guide the sound development of future financial networks.
Mamoru Yanase, FSA deputy director-general of the Strategy Development and Management Bureau, says: "Decentralised financial ecosystem continues to develop in complexity, and it is important to address emerging risks.
鈥淥n the other hand, blockchain technology including web3 could be a strong driver of innovation in the medium to long term. We [will work] with MAS, traditional financial institutions and fintechs to further enhance our knowledge in this area.鈥�
Standard Chartered鈥檚 global head of trade and working capital Kai Fehr says: 鈥淲e are committed to advancing the adoption of digital assets and unlocking its full potential to transform the financial industry. The initial pilot trade, conducted in collaboration with Singapore Exchange and Linklogis, proves the viability of assets-backed tokenisation as an innovative originate-to-distribute structure, and the potential opportunities it presents to investors to participate in financing real-world economic activity.
鈥淲e are eager to build on our learnings and take the next steps towards operationalising this innovation at scale, where we will focus on expanding the scope to include a wider range of asset classes, identifying additional partners and developing guardrails that ensures investor protection. The future is bright for connecting investors to opportunities that truly impact the real economy.鈥�
The report, , was issued in consultation with experts from the Bank for International Settlements Committee on Payments and Market Infrastructure.
This examines the progress of a series of industry pilot studies launched under its Project Guardian initiative, conducted in partnership with industry firms to test the viability of asset tokenisation and decentralised finance in financial services.
As part of these pilot studies, DBS Bank and SBI Digital Asset Holdings and UBS are working on a pilot repo transaction framework with natively issued digital bonds. The aim is to drive faster settlement, greater operational efficiency and more effective cross-border distribution for capital market instruments on digital asset networks.
HBSC, Marketnode and UOB have completed a technical pilot to test the issuance and distribution of a digital native structured product which, according to participants, illustrates potential to reduce issuance and service costs, to shorten the timeframe for issuance and settlement, and to offer greater opportunity for instrument customisation.
UBS Asset Management will launch a pilot study to evaluate digital native issuance of a variable capital company fund (VCC) on digital asset networks, providing opportunity to enhance distribution and secondary market trading for VCC funds.
Schroders is working with distributed ledger technology-based transaction network specialist Calastone to support a tokenised investment vehicle which can replicate and extend the benefits of traditional investment securities using VCCs.
Other pilot projects have focused on tokenisation of asset-backed securities, bonds and bank liabilities.
Standard Chartered has partnered with Linklogis to create an initial token offer platform supporting issuance of ABS tokens listed on the Singapore Exchange (SGX).
Citi is evaluating the pricing and execution of digital asset transactions on DLT, drawing on ledger data to enhance post-trade analytics and reporting.
MAS has confirmed that the Japan Financial Services Authority (FSA) has become the first overseas financial regulator to join Project Guardian, providing opportunity for the two financial supervisors to collaborate on digital asset innovation and best practice for asset tokenisation.
Commenting on this collaboration, Leong Sing Chiong, MAS deputy managing director for markets and development, says: 鈥淲hile MAS strongly discourages and seeks to restrict speculation in cryptocurrencies, we see much potential for value creation and efficiency gains in the digital asset ecosystem.
鈥淭his is why we are actively collaborating with the industry to foster a responsible and innovative digital asset ecosystem. As we enter this new phase of Project Guardian, we [will collaborate] with fellow policymakers and industry practitioners to jointly develop effective frameworks to guide the sound development of future financial networks.
Mamoru Yanase, FSA deputy director-general of the Strategy Development and Management Bureau, says: "Decentralised financial ecosystem continues to develop in complexity, and it is important to address emerging risks.
鈥淥n the other hand, blockchain technology including web3 could be a strong driver of innovation in the medium to long term. We [will work] with MAS, traditional financial institutions and fintechs to further enhance our knowledge in this area.鈥�
Standard Chartered鈥檚 global head of trade and working capital Kai Fehr says: 鈥淲e are committed to advancing the adoption of digital assets and unlocking its full potential to transform the financial industry. The initial pilot trade, conducted in collaboration with Singapore Exchange and Linklogis, proves the viability of assets-backed tokenisation as an innovative originate-to-distribute structure, and the potential opportunities it presents to investors to participate in financing real-world economic activity.
鈥淲e are eager to build on our learnings and take the next steps towards operationalising this innovation at scale, where we will focus on expanding the scope to include a wider range of asset classes, identifying additional partners and developing guardrails that ensures investor protection. The future is bright for connecting investors to opportunities that truly impact the real economy.鈥�
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