The Monetary Authority of Singapore (MAS) announced four plans to advance tokenisation in financial services on Nov 4.
One such plan includes forming commercial networks to deepen the liquidity of tokenised assets through Project Guardian. Following successful industry trials, MAS is facilitating the commercialisation of the products and services under Project Guardian by connecting a broader set of participants’ products and services across multiple currencies and assets. Through this, greater improvements in capital raising, secondary trading, asset servicing and settlement of tokenised assets may be realised, says the central bank in its Nov 4 statement.
MAS adds that several financial institutions, Citi, HSBC, Schroders, Standard Chartered and United Overseas Bank U11 (UOB) have formed the Guardian Wholesale Network industry group, which intends to establish a multi-member network to commercialise their respective asset tokenisation trials and scale usage.
Another plan includes developing an ecosystem of market infrastructures to facilitate seamless cross-border transactions.
This will be done through the Global Layer One (GL1) initiative, which was launched in 2023 to foster the development of foundational digital infrastructures. GL1 will now also undertake additional activities such as fostering alignment with governance, risk management controls and settlement arrangement conventions for cross border transactions. GL1 will also develop specifications for market infrastructures and asset lifecycle, which encourages interoperability between diverse systems. Finally, GL1 will create and provide templates including programmable compliance6 checks to build an ecosystem of compatible service providers, which will accelerate onboarding for new participants.
Under the third plan, fostering industry frameworks for tokenised asset implementation, two industry frameworks developed by Project Guardian industry group members were published today. The first framework, Guardian Fixed Income Framework (GFIF) integrates the International Capital Market Association’s Bond Data taxonomy, Capital Markets and Technology Association’s Token Standards, and the Global Financial Markets Association’s Design Principles for Tokenised Securities.
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This provides an industry guide to implementing tokenisation in debt capital markets, strengthen industry capabilities and catalyse adoption of tokenised fixed income solutions, says MAS.
The second, Guardian Funds Framework (GFF), provides a set of recommendations for industry best practices for tokenised funds. “This includes the Guardian Composable Token Taxonomy to facilitate development of tokenised investment vehicles comprising multiple assets, simplifying the process of incorporating new tokenised funds, and help achieve efficiencies in fund settlement,” the central bank explains.
MAS’s fourth plan is to enabling access to a common settlement facility for tokenised assets. This includes Singapore dollar (SGD) wholesale central bank digital currency (CBDC) for market testing purposes. The initial test network will offer three key features such as the issuance, transfer and redemption of SGD wholesale CBDC, with potential extensions to other forms of central bank and commercial bank liabilities. Automated and conditional triggers for tokenised transactions, including the use of purpose bound money is the next feature while facilitating linkages with existing financial market infrastructures is the final feature under the initial test network.
“MAS has seen strong interest in asset tokenisation in recent years, notably in fixed income, foreign exchange (forex), and asset management. We are encouraged by the keen participation from financial institutions and fellow policymakers to co-create industry standards and risk management frameworks to facilitate commercial deployment of tokenised capital markets products, and scale tokenised markets on an industry wide basis,” says Leong Sing Cheong, deputy managing director (markets and development) of MAS.
