The Monetary Authority of Singapore (MAS is partnering with the Financial Services Agency of Japan (FSA), the Swiss Financial Market Supervisory Authority (FINMA) and the United Kingdom’s Financial Conduct Authority (FCA) to advance digital asset pilots in fixed income, foreign exchange and asset management products.
Under MAS’ Project Guardian, MAS has collaborated with 15 financial institutions to carry out industry pilots on asset tokenisation in fixed income, foreign exchange, and asset management products. MAS says that these pilots have demonstrated the potential to reap significant market and transaction efficiencies from the use of tokenisation. As the pilots grow in scale and sophistication, there is a need for closer cross-border collaboration among policymakers and regulators. MAS has therefore established a Project Guardian policymaker group comprising FSA, FCA and FINMA.
MAS Project Guardian policymaker group aims
Specifically, the policymaker group aims to advance discussions on legal, policy and accounting treatment of digital assets. In addition, it will identify potential risks and possible gaps in existing policies and legislation relevant to tokenised solutions. It will explore the development of common standards for the design of digital asset networks and market best practices across various jurisdictions.
Furthermore, it will promote high standards of interoperability to support cross-border digital assets development. The group will facilitate industry pilots for digital assets through regulatory sandboxes, where applicable. And finally, it will promote knowledge sharing among regulators and industry.
Leong Sing Chiong, Deputy Managing Director (Markets and Development), MAS, said: “MAS’ partnership with FSA, FCA and FINMA shows a strong desire among policymakers to deepen our understanding of the opportunities and risks arising from digital asset innovation. Through this partnership, we hope to promote the development of common standards and regulatory frameworks that can better support cross border interoperability, as well as sustainable growth of the digital asset ecosystem.”
Regulatory collaboration vital to reap tokenisation benefits: R3
Asset tokenisation firm R3 has spearheaded many major developments in asset tokenisation. Last week, its DLT platform, Corda, underpinned the first live issuance of a digital bond on Euroclear’s newly launched digital financial market infrastructure.
R3 has also collaborated closely with MAS and was the technology partner of choice for MAS’s CBDC challenge in 2021.
Todd McDonald, co-founder and chief strategy officer at R3, argues that collaboration between regulators will be vital in reaping the full benefits of tokenisation. He says that this will help drive the development of much-needed industry standards. He adds: “The financial world is rocketing towards one filled with digital assets. If the correct tokenisation solutions and frameworks are in place – such as control location services, custody, and control frameworks, and most crucially, interoperability – the potential is huge. This will all depend on the evolution of industry standards.
“Regulatory sandboxes, such as the EU’s DLT Pilot Regime or the UK’s FMI Sandbox, also offer certainty and encourage experimentation. They support new technologies that enable tokenisation, contributing to enduring industry standards.
Open collaboration among various stakeholders across both public and private industries, including financial institutions, regulators, and technology providers, will be key to unlocking the full potential of this transformative technology.
By working together and adopting comprehensive frameworks, the finance industry can harness the benefits of tokenisation and create a more inclusive and efficient financial ecosystem.”
