Singapore’s MAS to Explore Blockchain and DeFi Use Cases
- Called Project Guardian, the new MAS pilot will be led by financial heavyweights J.P. Morgan, DBS Bank, and Marketnode.
- The first pilot of the project will explore DeFi applications in wholesale funding markets through the creation of liquidity pool of tokenized bonds and deposits.
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The Monetary Authority of Singapore (MAS) is planning to launch a pilot to research the use cases of tokenized digital assets and decentralized finance (DeFi) on public blockchains, the financial regulator said in a press release on 31 May.
According to the announcement, the pilot program — called “Project Guardian” — will collaborate with financial heavyweights such as BDS, Marketnode, and J.P. Morgan in examining the “economic potential and value-adding use cases of asset tokenization”. The project will explore tokenization and DeFi using open and interoperable networks, so that digital assets can be traded across platforms, including existing financial infrastructures. The chief FinTech officer of MAS, Sopnendu Mohanty, said in a statement:
“Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem. The learnings from Project Guardian will serve to inform policy markets on the regulatory guardrails that are needed to harness the benefits of DeFi, while mitigating its risks.”
The financial regulator will not only stress test the viability of apps in asset tokenization and DeFi, but also develop use cases in four main areas, namely trust anchors, open interoperable networks, asset tokenization, and institutional grade DeFi protocols. The first pilot of Project Guardian will see the creation of permissioned liquidity pool — which will consist of tokenized bonds and deposits — that will be used to carry out secured borrowing and lending on a public blockchain.
Both J.P. Morgan and DBS Bank have a long track record of developing and building digital asset and blockchain systems for their wholesale banking operations. The two entities have also worked on several blockchain-based payment platforms, and last year collaborated in the creation of Patriot, a firm that will try to disrupt the traditional payments model through blockchain technology.
- Launched in 2020, the bank’s permissioned blockchain-based value transfer system, called JPM Coin, now handles around $1 billion in daily transactions.
- The bank’s global head of payments said they now plan to widen the usage of the coin, and possibly create a “more retail version” of the token.
The corporate sign in front of the JP Morgan Chase & Co office building on Park Avenue, New York City, October 29, 2016. Felix Lipov/Shutterstock
- The requirement to deposit customer assets into a statutory trust comes as a result of a MAS public consultation from October 2022 focused on reducing risk in crypto trading.
- Singapore’s central bank also restricted crypto firms from facilitating lending and staking to retail customers, though the services are still available to institutional clients.
- Crypto.com has once again expanded its regulatory achievements with the acquisition of a major payment institution license for digital payment token services in Singapore.
- The license, for which the company received an in-principle approval last June, enables the exchange to provide a greater range of payment services in Singapore.