MAS To Explore the Economic Potential of DeFi

The Monetary Authority of Singapore (MAS) has announced the commencement of “Project Guardian”, a collaborative initiative with the financial industry that seeks to explore the economic potential and value-adding use cases of asset tokenization.

Project Guardian, which was launched by Heng Swee Keat, Deputy Prime Minister and Coordinating Minister for Economic Policies, at the Asia Tech x Singapore Summit, will test the feasibility of applications in asset tokenization and DeFi while managing risks to financial stability and integrity.

“MAS is closely monitoring innovations and growth in the digital asset ecosystem and working through the potential opportunities and risks that come with new technologies - to consumers, investors, and the financial system at large,” Sopnendu Mohanty, Chief FinTech Officer, MAS, said

He added that through practical experimentation with the financial industry and the broader ecosystem, MAS seeks to sharpen its understanding in this rapidly transforming digital assets ecosystem and that 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.

MAS aims to develop and pilot use cases in Open, interoperable networks, Trust anchors, Asset tokenization, and Institutional grade DeFi protocols.

The first industry pilot under Project Guardian will explore potential DeFi applications in wholesale funding markets and will be led by DBS Bank Ltd., JP Morgan, and Marketnode. It will involve the creation of a permissioned liquidity pool comprising tokenized bonds and deposits. The pilot aims to carry out secured borrowing and lending on a public blockchain-based network through the execution of smart contracts. 

Increased regulatory scrutiny and long wait times for crypto exchanges applying for licenses had clouded hopes for Singapore to become a global hub for digital assets, with the localized arm of the global exchange Binance shutting down last December. 

Crypto derivatives platform Bybit relocated its headquarters from Singapore to Dubai in April. Singapore-based exchange Crypto.com likewise recently signaled the company plans to open its first Dubai outpost.