Singapore to Explore Digital Asset Use Cases in New Pilot Program

The Monetary Authority of Singapore (MAS) announced Tuesday the launch of a pilot program dubbed “Project Guardian” to explore use cases for digital assets in asset tokenization and decentralized finance (DeFi).

Singapore Launches Digital Asset Pilot Program

The pilot program was revealed by Mr. Heng Swee Keat, Singapore’s Deputy Prime Minister and Coordinating Minister for Economic Policies. 

Project Guardian aims to explore the viability of applications in asset tokenization and DeFi while evaluating risks to financial stability and integrity.

MAS said the testing will focus on these four areas: open and interoperable networks, trust anchors, asset tokenization, and institutional-grade DeFi protocols.

The first stage of the testing will explore DeFi applications in wholesale funding markets through the creation of a permissioned liquidity pool consisting of tokenized bonds and deposits to enable borrowing and lending on a public blockchain.

As per the report, the pilot testing will be led by major financial institutions including DBS Bank Ltd., JP Morgan, and Marketnode.

“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,” Mr. Sopnendu Mohanty, Chief FinTech Officer, MAS, said.

Singapore Maintains Tough Stance on Crypto

Singapore has in the past maintained a tough regulatory stance on matters relating to the crypto industry. Earlier this year, the world’s largest crypto exchange, Binance, shut down its operations in the country due to regulatory concerns.

In January, MAS issued warnings to crypto exchanges advertising their products to the public, noting that they should only market their services on their websites, mobile applications, and social media platforms. The country also recently passed a bill to tighten regulations for local crypto firms.

With DeFi not regulated in most parts of the world, Singapore is looking to explore the benefits and risks the sector could bring to the country’s financial system before regulating it.

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