The Monetary Authority of Singapore (MAS), alongside international financial institutions, has successfully completed the first phase of the Global Layer 1 (GL1) initiative.
The regulator is now focusing on developing standards, market practices, and governing principles for digital infrastructure supporting tokenised assets.
The MAS Global Layer 1 initiative includes partnerships with global industry associations and financial institutions to develop common standards in fixed income, foreign exchange (FX), and asset and wealth management.
Over the past two years, MAS has collaborated with 24 financial institutions to pilot asset tokenisation use cases under Project Guardian.
These institutions encompass asset managers, market operators, custodians, credit rating agencies, and commercial banks.
To further advance these efforts, MAS welcomes the Global Financial Markets Association (GFMA), International Capital Market Association (ICMA), and International Swaps and Derivatives Association (ISDA) as the first global industry associations to join Project Guardian’s industry group.
Recently, S&P Global Ratings announced its participation in Project Guardian. It will be contributing to the Fixed Income workstream by developing analytic frameworks and benchmarks in digital assets and tokenised markets.
Additionally, Alta Exchange, Hamilton Lane, and Phillip Securities are exploring introducing Shariah-compliant tokenised private credit fund as part of their involvement in Project Guardian.
MAS’ Global Layer 1 initiative aims to broaden access to private credit and enhance liquidity through the introduction of a Shariah-compliant tokenised private credit fund.
Building on the success of these pilots, MAS will establish three workstreams to develop standards and frameworks across key asset classes.
The Fixed Income workstream will collaborate with ICMA to develop protocols and data specifications, while partnering with GFMA to create standard clauses for smart contracts of fixed income products.
The FX workstream, in partnership with ISDA and the Global Foreign Exchange Division (GFXD) of the GFMA, will focus on FX data specifications, risk management frameworks, and documentation.
The Asset & Wealth Management workstream will work with global custodians and asset managers on common data models and risk considerations for fund tokenisation.
To scale tokenised asset transactions globally, there is a need for shared ledger infrastructure that accommodates various tokenised financial assets while meeting regulatory requirements.
Under the GL1 initiative, MAS is collaborating with international policymakers and financial institutions, including BNY, Citi, J.P. Morgan, MUFG Bank, and Societe Generale-FORGE, on business, governance, risk, legal, and technology considerations for a shared ledger infrastructure.
Policymakers from the European Central Bank, Banque de France, and the International Monetary Fund are also observing the GL1 initiative.
A whitepaper detailing the design principles, objectives, and potential uses of GL1 was published.
Moving forward, GL1 plans to expand collaboration with more policymakers, central banks, regulators, international standards-setting bodies, and financial institutions.
The next phase includes exploring the establishment of a non-profit organisation (GL1 Org) to develop principles, policies, and standards for operating global shared ledger infrastructure, alongside potential independent operating companies to build and deploy the GL1 infrastructure.
Leong Sing Chiong, Deputy Managing Director (Markets and Development), MAS, said,
“Project Guardian provides a useful platform for central banks, regulators and financial institutions to understand the opportunities and risks of asset tokenisation while operating within a safe environment.
The GL1 initiative is an important next step to realise the potential of asset tokenisation and reap efficiencies in capital markets. Such public-private partnerships are fundamental to ensure financial infrastructures continue to serve the needs of market participants and consumers, while maintaining market integrity and financial stability.”