Singapore’s MAS Launches Pilot to Explore Tokenization, DeFi

The Monetary Authority of Singapore (MAS) announced on Tuesday the commencement of a financial industry-wide collaborative project to explore the economic potential and value of asset tokenization.

Dubbed Project Guardian, it will test the feasibility of applications around asset tokenization Tokenization Tokenization represents the process of substituting a sensitive data element with a non-sensitive equivalent, i.e. token, which bears no extrinsic or exploitable meaning or value. In essence, the rights to the ownership of an asset are converted into a digital token. Tokenization can be used to own an entire unit of an asset. For example, one token that represents the ownership of a piece of real estate or to split ownership of a single unity of an asset such as 200,000 tokens, each one represen Tokenization represents the process of substituting a sensitive data element with a non-sensitive equivalent, i.e. token, which bears no extrinsic or exploitable meaning or value. In essence, the rights to the ownership of an asset are converted into a digital token. Tokenization can be used to own an entire unit of an asset. For example, one token that represents the ownership of a piece of real estate or to split ownership of a single unity of an asset such as 200,000 tokens, each one represen Read this Term and decentralized finance (DeFi). Additionally, the primary objective would be to manage risks for financial stability and integrity.

The project was launched by the Deputy Prime Minister and Coordinating Minister for Economic Policies of Singapore, Heng Swee Keat.

“MAS is closely monitoring innovations and growth in the digital asset ecosystem and working through the potential opportunities and risks that come with new technologies – to consumers, investors and the financial system at large,” said Sopnendu Mohanty, the Chief FinTech Officer at MAS.

“Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem.”

With this initiative, MAS has become one of the few major regulators that are exploring the future of finance with DeFi protocols. If successful, it might further bolster the position of Singapore on the global financial hub map.

Focus Areas

The use cases of the regulator in the pilot phase will be focused on four areas: open and interoperability of networks, trusted anchors, asset tokenization and institutional-grade DeFi protocols.

The pilot initiative of the project will be led by DBS Bank, JP Morgan and Marketnode. It will explore the idea of DeFi in the wholesale market with the creation of a permissioned liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term pool comprising of tokenized bonds and deposits. It will allow smart contract-based borrowing and lending on a public blockchain.

“Developed on [the] public blockchain, this pilot is also pivotal as it furthers efforts to innovate, advance and scale institutional financial applications on blockchain and their interoperability across different blockchain networks with the long-established rails of the existing financial markets,” the Group Head of Planning and Strategy at DBS, Han Kwee Juan, said.