Singapore Advances Asset Tokenization with New Framework from MAS
Date: 2024-11-06 Author: Henry Casey Categories: IN WORLD
Fostering Successful Tokenization Trials
At the inaugural MAS Layer One Summit, MAS Deputy Governor Leong Sing Chiong celebrated the achievements of major financial institutions participating in Project Guardian that have demonstrated the potential of tokenization for FX and funds transactions. More than 40 institutions have conducted over 15 trials across seven jurisdictions and six currencies.
However, the Deputy Governor also highlighted the limitations of these trials:
“No one has yet achieved scale. Many promising use cases have not yet been widely adopted by the industry. In addition, a supporting infrastructure is needed to enable successful use cases to scale beyond individual networks.”
To realize tokenized assets at scale, liquidity, infrastructure, standardized frameworks, and common assets for settlement are needed. MAS aims to address each of these challenges.
Commercialization Roadmap
Launched in 2022, Project Guardian is already facilitating liquidity through capital raising, secondary trading, servicing, and asset settlement. To address infrastructure needs, MAS introduced Global Layer One in 2023, developed with support from BNY, Citi, JPMorgan, MUFG, and Societe Generale-FORGE. Its role will be expanded next year, with Euroclear and HSBC joining the project to develop the use cases and ecosystem.
A pair of framework documents for implementing tokenization were unveiled on November 4. The Guardian Fixed Income Framework includes standards and principles from international organizations for implementing tokenization in the debt capital market. The Guardian Funds Framework presents best practices for fund tokenization, including a taxonomy of Guardian composite tokens.
In addition, an SGD Testnet will be available to settle payments and securities transactions using tokenized Singapore currency. Project Guardian and Project Orchid participants will be able to use the wholesale Singapore central bank digital currency (CBDC) for settlement on the testnet.
Project Orchid explored retail CBDC use cases and introduced the concept of a target programmable asset, which will now also be implemented on the testnet.
Achieving commercialization becomes a logical step when a project achieves its goals. In October 2023, Project MBridge announced its launch in a minimum viable product version.
