The Monetary Authority of Singapore (MAS) has released a comprehensive report presenting a framework for the design of open and interoperable networks for digital assets. The report, titled “Enabling Open and Interoperable Networks,” is a collaborative effort between MAS and subject matter experts from the Committee on Payments and Market Infrastructure (CPMI) of the Bank for International Settlements, with contributions from various financial institutions. [1].

In addition to outlining the framework, the report explores the application of the CPMI-IOSCO Principles for Financial Market Infrastructures to evolving models of digital asset networks. It draws insights from industry pilots conducted under Project Guardian, an initiative of MAS in partnership with the financial industry. The objective of Project Guardian is to evaluate the feasibility of tokenizing assets and decentralized financeensuring that emerging digital asset networks adhere to international standards that promote security and efficiency within the financial market infrastructure.

As part of its ongoing efforts, MAS has expanded Project Guardian to encompass a broader range of financial asset classes. To support this expansion, MAS has established the Project Guardian Industry Group, consisting of 11 leading financial institutions [2]. These institutions will lead industry pilot projects in asset and wealth management, fixed income and currencies.

Within the field of asset and wealth management, several pilot projects are currently being carried out. HSBC, Marketnode and UOB have successfully completed a technical pilot involving the issuance and distribution of a digital native structured product. This pilot showcased the potential benefits of lower costs, reduced settlement times, improved customization, and broader distribution within the structured product chain. Another pilot project, led by UBS Asset Management, is exploring the native issuance of a Variable Capital Company (VCC) fund in digital asset networks. This initiative aims to improve the distribution of funds and facilitate better secondary market trading of VCC fund shares, which will result in operating efficiencies for the industry. In addition, Schroders and Calastone are collaborating to investigate the capabilities of a tokenized investment vehicle that can pool and issue traditional investment securities using VCC. Such a vehicle could provide a profitable investment allocation for retail and institutional investors while simplifying day-to-day operating processes.

In the fixed income and currency sectors, pilot projects involving tokenized asset-backed securities, tokenized bonds, and tokenized bank liabilities are underway. Standard Chartered, in collaboration with Linklogis, has developed an initial token offering platform that enables the issuance of tokens for asset-backed securities listed on the Singapore Stock Exchange. The pilot demonstrated the feasibility of using asset-backed tokenization to give investors access to return-generating tokens tied to cash flows from underlying trade financing and working capital loans. In addition, DBS Bank, SBI Digital Asset Holdings and UBS AG are executing a pilot repurchase agreement (repo) using natively issued digital bonds. This initiative aims to improve flexibility, operational efficiency, speed of settlement, and cross-border distribution and settlement efficiency of capital market instruments on digital asset networks. Citi is also participating in a pilot project focusing on pricing and transaction execution of digital assets on a distributed ledger. By leveraging ledger data, this initiative aims to improve post-trade reporting and analysis.

In a significant development, the Japan Financial Services Agency (JFSA) has become the first foreign financial regulator to join Project Guardian, forging a partnership with MAS. This collaboration will facilitate the sharing of knowledge and sharing of best practices in digital asset innovation and asset tokenization, while ensuring the safeguarding of financial stability and integrity.

Mr. Leong Sing Chiong, Deputy Managing Director (Markets and Development) of MAS, expressed the institution’s cautious stance on cryptocurrency speculation while emphasizing the potential for value creation and efficiency gains in the digital asset ecosystem. . He highlighted the commitment of MAS to collaborate with the industry to promote a responsible and innovative life