Singapore completes first foreign exchange with tokenized currency

In a successful pilot demonstration, DBS Bank, JP Morgan, and SBI Digital Asset Holdings conducted foreign exchange using tokenized Japanese yen, Singapore dollars, Japanese government bonds, and Singapore government security bonds as liquidity pools to leverage the cross-currency transaction, the Monetary Authority of Singapore (MAS) announced.

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According to a series of tweets, JP Morgan utilized Polygon for the trade, as the firm wanted to use Ethereum and required cheaper gas fees for identity verification. Following this, the investment banking company used Aave for its permissioned pools, deploying a modified Aave Arc so that JP Morgan could set parameters such as interest and foreign exchange rates.

The firm issued tokenized Singapore dollar deposits as well as W3C Verifiable Credentials to provide compliant access to Aave, then it built an institutional wallet.

“The live transactions executed under the first pilot demonstrate that cross-currency transactions of tokenized assets can be traded, cleared, and settled instantaneously among direct participants,” said MAS.

On top of the success of this pilot, MAS has announced two future projects.

Standard Chartered Bank will be looking to issue tokens linked to trade finance assets, aiming to digitalize the trade distribution market. Meanwhile, HSBC and UOB are working with Marketnode to create digital issuances of wealth management products.

See also: Is Dubai stealing Singapore’s thunder in crypto?