Blockchain

MAS Launches Project Guardian to Pilot Use Cases in Digital Assets

The Monetary Authority of Singapore (MAS) announced the launch of Project Guardian, a collaborative initiative that seeks to explore the economic potential and value-adding use cases of asset tokenisation.

Project Guardian will test the feasibility of applications in asset tokenisation and DeFi while managing risks to financial stability and integrity.

MAS said that it aims to develop and pilot use cases in four main areas. The first will be to explore the use of public blockchains to build open, interoperable networks that enable digital assets to be traded across platforms and liquidity pools.

The regulator will also be looking to establish a trusted environment for the execution of DeFi protocols through a common trust layer of independent trust anchors. Trust anchors are regulated financial institutions that screen, verify and issue verifiable credentials to entities that wish to participate in DeFi protocols.

MAS will also be examining the representation of securities in the form of digital bearer assets and the use of tokenised deposits issued by deposit-taking institutions on public blockchains.

Its fourth area of focus will be to study the introduction of regulatory safeguards and controls into DeFi protocols to mitigate against market manipulation and operational risk.

The first industry pilot under Project Guardian will explore potential DeFi applications in wholesale funding markets.

The pilot, led by DBS Bank, JP Morgan and Marketnode, involves the creation of a permissioned liquidity pool comprising tokenised bonds and deposits.

It aims to carry out secured borrowing and lending on a public blockchain-based network through execution of smart contracts.

Aside from Project Guardian, MAS added that it is open to responsible digital asset innovation initiatives from the industry. Interested parties can submit their proposals to the Fintech Regulatory Sandbox for live experimentation.

Sopnendu Mohanty

Sopnendu Mohanty, Chief Fintech Officer, MAS, said,

“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.”

Han Kwee Juan

Han Kwee Juan, Head, Group Planning and Strategy, DBS said,

“DBS is pleased to lead the charge to explore potential digital assets and use of DeFi concepts that will enhance efficiency and scalability in trading, clearing and settlement; while managing risks to financial stability and integrity.

We believe that these early explorations in DeFi solutions will ensure the competitiveness and relevance of Singapore as a cutting edge financial center.”