Singapore is enhancing asset tokenization commercialization with new frameworks, collaborative efforts, and initiatives like Project Guardian and Global Layer One.
Singapore is actively pursuing the commercialization of asset tokenization. The Monetary Authority of Singapore (MAS) has announced plans to support this initiative. These plans involve forming commercial networks, developing market infrastructures, and fostering industry frameworks for tokenized assets.
MAS has brought together over 40 financial institutions, industry associations, and international policymakers under Project Guardian to deepen liquidity. Some participants are ANZ, Deutsche Bundesbank, and the World Bank. Combined, they are conducting trials on asset tokenization in six currencies, including USD and EUR. More than 15 trials have been dedicated to financial instruments, such as funds and structured products.
In parallel with these trials, MAS plans to promote the commercialization of such products when they go to market. By linking multiple participants, MAS expects to affect capital, trading, and tokenized asset settlement positively. These are important, particularly for increasing the efficiency of new and secondary offerings. Wholesale credit institutions such as Citi and HSBC have formed the Guardian Wholesale Network to facilitate such efforts.
MAS Develops Links to Common Settlement Infrastructure
In 2023, MAS initiated the Global Layer One (GL1) to build digital structures to support its goals. The latter will act as a foundation for commercial networks and provide the environment for efficient cross-border transactions. JPMorgan and BNY Mellon, among other participants, are shaping the business and technical needs for the GL1 platform.
Furthermore, GL1 is expanding to cover other linked market structures. It will set control principles on governance and risk management to protect the market. Furthermore, GL1 will identify requirements for achieving interconnectivity between different systems. To integrate the compliance measures into the GL1 framework, MAS is currently collaborating with the Bank for International Settlements.
To encourage more tokenized assets, MAS issued two industry frameworks today. The Guardian Fixed Income Framework (GFIF) offers best practices for tokenizing debt capital markets. However, the Guardian Funds Framework (GFF) describes the current practices of tokenized funds.
To encourage the use of tokenized assets, MAS is creating links to common settlement infrastructure. This includes the S$ wholesale central bank digital currency (CBDC). The SGD Testnet will enable selected financial institutions to settle transactions in S$ CBDC to enhance confidence in tokenized asset settlements.
Mr. Leong Sing Chiong, MAS’s Deputy Managing Director, noted the strong interest in asset tokenization. He expressed optimism about collaboration between financial institutions and policymakers to develop industry standards and frameworks. Ultimately, this effort aims to scale tokenized capital markets across Singapore and beyond.
