Project Guardian: MAS partners S’pore financial sector to study asset tokenisation and DeFi

This week, the Monetary Authority of Singapore (MAS) announced the commencement of Project Guardian, a collaborative initiative with the financial industry. The project will explore the economic potential and value of asset tokenisation. 

Partners in the project include DBS, JP Morgan, and Marketnode.

This comes as cryptocurrencies and blockchain technology soars in popularity, despite volatile markets and warnings to retail customers to avoid using cryptocurrencies. That being said, MAS has also previously stated that they will continue to look at the value of blockchain technology, without allowing the market hype to cloud their judgement.

The project itself will focus on the four main areas of open and interoperable networks, trust anchors, asset tokenisaiton, and institutional grade DeFi protocols.

Sopnendu Mohanty, Chief Fintech Officer at MAS, stated that the regulatory body is closely monitoring innovations in the digital asset ecosystem, but that these new technologies present both risks and opportunities.

“Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem. 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.

What will the project be looking out for?

The first industry pilot under Project Guardian will explore potential DeFi applications in wholesale funding markets, and is led by the aforementioned partners.

The pilot aims to carry out secured borrowing and lending on a public blockchain-based network through the execution of smart contracts.

Han Kwee Juan, Head of Group Planning and Strategy at DBS, stated that the bank was pleased to lead the charge to explore potential digital assets and use of DeFI. 

“This pilot is also pivotal as it furthers efforts to innovate, advance and scale institutional financial applications on blockchain and their interoperability across different blockchain networks with the long-established rails of the existing financial markets. We believe that these early explorations in DeFi solutions will ensure the competitiveness and relevance of Singapore as a cutting edge financial centre,” he added.

In addition, MAS has stated that they are interested in established a trusted environment for the execution of DeFi protocols, to ensure that entities on the blockchain are regulated and verified.

Additionally, the project is expected to provide information on regulatory safeguards and controls of DeFi protocols to guard against market manipulation and operational risk.

Featured Image Credit: Edgar Su via Reuters