The new project will see MAS explore applications in Decentralized Finance (DeFi) in wholesale funding markets by creating liquidity pools of tokenized deposits and bonds.
Project Guardian Ropes in JPMorgan and DBS to Test Tokenization Use
The Monetary Authority of Singapore (MAS) has unveiled a new project, referred to as Project Guardian, which is a blockchain-based trial that will use tokenization. The project will include regulated institutions that will serve as “trust anchors”, with the initial pivots being DBS Bank, JP Morgan, and Marketnode for bonds.
The Project Guardian initiative was announced during the Asia-Tech X Singapore Summit, which was foreseen by the country’s Prime Minister and the Coordinating Minister for Economic Policies, Heng Swee Keat. Under the project, MAS will explore decentralized finance (DeFi) application in the wholesale funding markets by developing liquidity pools of tokenized deposits and bonds to help execute lending and borrowing on the public blockchain.
According to Sopendu Mohanty, the MAS Chief Fintech officer, lessons learnt from the project will form the basis for building new policies for the Singapore market and regulatory framework needed for DeFi application and minimizing hazards.
Both JPMorgan and DBS have some experience in the blockchain and digital assets niches in their wholesale banking units. In 2021, DBS unveiled a USD11 million digital bond in a security token offering (STO). JPMorgan also launched its Onyx Digital Assets Network and has now processed more than USD300 billion of transactions.
DBS Bank has particularly been active in the crypto industry for a number of years, creating its own institutional-grade crypto exchange in December 2020. Since then, the firm has been enhancing its range of supported crypto assets. In May 2021, Crypto Trust was added to its cache of products.
MAS is taking the lead in this exploratory model, making it the first one to do so. If it succeeds, it might help Singapore to further cement its position as a financial hub.