MAS to Drive Commercialisation of Asset Tokenisation with Expanded Initiatives

The Monetary Authority of Singapore (MAS) has unveiled a comprehensive plan to support the commercialisation of asset tokenisation in financial services.

In his opening keynote at the Layer One Summit on Monday, part of the Insights Forum 2024, Leong Sing Chiong, MAS Deputy Managing Director (Markets and Development), said that the regulator is "seeing greater momentum towards tokenisation in financial services," citing a range of industry pilots that have been progressing well under Project Guardian, MAS’ asset tokenisation initiative.

Building on the successful progress of Project Guardian, these initiatives aim to deepen liquidity, create compatible infrastructures, set industry standards, and provide a common settlement facility for tokenised assets, and aim to set the groundwork for the commercial deployment of tokenised products at scale

"We think there are four jigsaw puzzle pieces that need to come together to support industry-wide deployment of tokenised assets: Liquidity, Foundational Infrastructure, Standardised Frameworks and Protocols, and Common Settlement Assets," Leong said, noting that MAS is facilitating the industry’s efforts to establish commercial networks for payments, capital raising, and secondary trading of tokenised assets.

Developing Market Infrastructure Ecosystems

MAS launched the Global Layer One (GL1) initiative in 2023 as a foundational framework to support cross-border digital asset transactions. GL1, now expanding its scope, aims to build an ecosystem of interoperable market infrastructures that facilitate the seamless trading of tokenised assets globally.

Euroclear, HSBC, and other global market infrastructure providers have joined the initiative, further bolstering GL1’s capabilities and supporting the rollout of digital asset securities control principles.

Industry Frameworks for Tokenised Asset Implementation

To facilitate broader acceptance and consistent implementation of tokenised assets across financial institutions, MAS announced the publication of two industry frameworks t0day: the Guardian Fixed Income Framework (GFIF) and the Guardian Funds Framework (GFF). Developed in collaboration with Project Guardian industry members, these frameworks offer guidelines for tokenising debt and fund assets.

The GFIF combines standards from leading industry groups like the International Capital Market Association, while the GFF proposes best practices for creating tokenised funds. Both frameworks support industry adoption by providing a streamlined approach to incorporating tokenised solutions, simplifying fund settlement, and boosting operational efficiency.

Common Settlement Facility for Tokenised Assets

MAS is also advancing the settlement capabilities of tokenised assets through a common settlement facility. The SGD Testnet, a network for the issuance, transfer, and redemption of S$ wholesale Central Bank Digital Currency (CBDC), will provide programmable transaction capabilities, interoperability with existing financial infrastructures, and reduced settlement risk. Participating financial institutions, including DBS, OCBC, Standard Chartered, and UOB, will test use cases for payments and securities settlement, paving the way for enhanced security and reliability in tokenised asset markets.

"Viewed holistically, we see a possible future architecture of a globally scalable tokenised asset infrastructure that can enable interoperability across commercial networks, while powering tokenised asset transactions seamlessly across borders and markets," Leong said.

SFF 2024

The Singapore Fintech Festival 2024 kicks off on Wednesday. The focus will be on harnessing the power of cutting-edge technologies to drive sustainable and inclusive economic growth within the financial sector

A key theme of SFF 2024 will be the exploration of artificial intelligence (AI) and quantum computing's potential to revolutionize financial services. SFF 2024 will also highlight the role of fintech in driving sustainable finance initiatives. Attendees can expect discussions on how financial technologies can be used to promote environmentally conscious practices and support a greener future