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Monetary Authority of Singapore (MAS) Partners With Financial Industry to Endorse the use of Digital Assets

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The Monetary Authority of Singapore (MAS) announced yesterday 31 May, 2022 in Singapore, The commencement of Project Guardian, a collaborative initiative with the financial industry that seeks to explore the economic potential and value-adding use cases of asset tokenization. Mr Heng Swee Keat, Deputy Prime Minister and Coordinating Minister for Economic Policies, announced Project Guardian this morning at the Asia Tech x Singapore Summit in the early hours on Wednesday.

HOW IS THE DIGITAL ASSEST USED:

This digital assets is used on the term called tokenization ,Tokenization is the process of using a smart contract on a blockchain to digitally represent assets or items of value. Thus allowing high valued financial and real economic assets to be evaluated and exchanged on peer-to-peer technology over the internet. where financial activities and transactions such as borrowing, lending, and trading can be carried out autonomously on a blockchain without the use of middlemen, such features has the potential to improve financial services efficiency, accessibility, and affordability, as well as increase liquidity in financial markets and increase economic inclusion.

This Project will also will test the viability of asset tokenization and DeFi ( Decentralized Finance) applications while balancing the threats to financial stability and integrity. The goal of MAS is to create and test use cases in four primary areas:

  1. TRUST ANCHOR : Establish a trusted environment for the execution of DeFi( Decentralized Finance) 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( Decentralized Finance)protocols. This ensures that participants trade only with verified counterparties, issuers and protocol developers.
  2. ACCESSIBILITY : Look at how public blockchains can be used to create open, interoperable networks that allow digital assets to be exchanged across platforms and liquidity pools. Interoperability with existing financial infrastructure is part of this. Walled gardens in digital exchanges and fragmented private markets can be mitigated by open, interoperable networks.
  3. ASSESTS TOKENIZATION: Examine the portrayal of securities as digital bearer assets and the use of tokenized deposits issued by deposit-taking institutions on public blockchains. The goal of the project is to build on current token standards, add trust anchor credentials, and make asset-backed tokens interoperable with other digital assets used in DeFi protocols( Decentralized Finance) on open networks.
  4. DeFi PROTOCOLS FOR INSTITUTION USE  – Look into incorporating regulatory safeguards and controls into DeFi protocols to protect against market manipulation and operational risk. The study will also look into how smart contract auditing skills can be used to find code flaws.

Project Guardian’s initial industrial pilot will look into potential DeFi uses in wholesale funding markets. DBS Bank Ltd., JP Morgan, and Market node  are leading the pilot, which entails the construction of a permissioned liquidity pool made up of tokenized bonds and deposits. This Project will use smart contracts to conduct secured borrowing and lending on a public blockchain-based network. MAS supports other industry activities that address Project Guardian’s four focus areas. Aside from Project Guardian, MAS continues to promote industry-led responsible digital asset innovation efforts and welcomes interested parties to submit suggestions for live experimentation to the FinTech Regulatory Sandbox. MAS is actively watching innovations and new technologies,” stated Mr. Sopnendu Mohanty, MAS’s Chief FinTech Officer.

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