MAS tests digital assets with DBS, Temasek, JP Morgan pilot

The Monetary Authority of Singapore (MAS) is exploring the economic potential of asset tokenization in collaboration with players in the financial industry.

Singapore CBD / Photo by Shawnanggg on Unsplash

Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat announced the initiative, dubbed Project Guardian, at the Asia Tech x Singapore Summit.

The pilot, led by DBS Bank, JP Morgan, and SGX-Temasek digital asset venture Marketnode, will explore potential decentralized finance (DeFi) applications in wholesale funding markets. It also aims to carry out secured borrowing and lending on a public blockchain-based network via the execution of smart contracts.

Through the initiative, MAS is exploring use cases in four main areas, including open and interoperable networks. The regulator seeks to use public blockchains to build networks that enable digital assets to be traded across platforms and be interoperable with existing financial infrastructure.

Another area of focus is establishing a trusted environment to execute DeFi protocols with the help of regulated financial institutions. Project Guardian, which involves the creation of a permissioned liquidity pool made up of tokenized bonds and deposits, will also study the introduction of regulatory safeguards into DeFi protocols to mitigate market manipulation.

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Sopnendu Mohanty, MAS’ chief fintech officer, said the regulator is closely monitoring innovations and growth in the digital asset ecosystem and is working through the potential opportunities and risks that come with new technologies.

“The learnings from Project Guardian will serve to inform policy markets on the regulatory guardrails that are needed to harness the benefits of DeFi while mitigating its risks,” he said.