MAS partners financial industry to expand asset tokenisation initiatives, publishes whitepaper on interlinking networks
29 November 2023
On 15 November 2023, the Monetary Authority of Singapore (“MAS”) announced that it is working with the financial industry to expand asset tokenisation initiatives and develop foundational capabilities to scale tokenised markets. These developments under Project Guardian will catalyse the institutional adoption of digital assets, with the aim of freeing up liquidity, unlocking investment opportunities, and increasing the efficiency of financial markets.
Expand asset tokenisation initiatives
Project Guardian’s industry group of 17 financial institutions (“FIs”) has initiated five additional industry pilots to test promising asset tokenisation use cases.
MAS explains that this potentially paves the way for integration across the capital markets value chain including listing, distribution, trading, settlement, and asset servicing.
In response to strong interest from the funds industry, MAS is launching a new funds workstream within the Project Guardian industry group focused on the native issuance of variable capital company (“VCC”) funds on digital asset networks. This workstream aims to address tax, policy, and legal considerations while increasing distribution channels for asset managers. MAS will collaborate with the Accounting and Corporate Regulatory Authority to better assess the opportunities and risks of adopting digitally native VCC fund shares.
Launch digital infrastructure initiatives to scale tokenised markets
MAS is collaborating with international policymakers and FIs to explore the design of an new open, digital infrastructure - Global Layer One (“GL1”) - that will host tokenised financial assets and applications. GL1 will facilitate seamless cross-border transactions and enable tokenised assets to be traded across global liquidity pools, while meeting relevant regulatory requirements and guidelines. MAS explains that the participation of public-private stakeholders ensures that the foundational digital infrastructures are established in accordance with international standards.
MAS is also collaborating with the financial industry to develop an Interlinked Network Model (“INM”) which will serve as a common framework for exchanging digital assets across independent networks. The INM will allow FIs to transact
with each other without the need for all of them to be on the same network. MAS has also published a whitepaper titled “Interlinking Networks” which details how an INM may be applied in practice and the design considerations for its implementation.
Reference materials
The following materials are available on the MAS website www.mas.gov.sg: