Singapore’s Central Bank Releases Report on Tokenized Asset Network Models Following Successful Trials

Singapore’s Monetary Authority (MAS) has released its Project Guardian report, which highlights the findings from trials conducted by the MAS and 11 financial institutions on tokenized asset network models. The report emphasizes the importance of open and interoperable digital asset networks for unlocking the full potential of asset tokenization.

The project examined various infrastructure models and identified options for platform type, asset type, and network access, with a focus on best practices. While the MAS clarified that it does not endorse any specific model, it drew observations from three test cases.

The first test case explored over-the-counter (OTC) foreign exchange transactions. It highlighted the collaboration between DBS Bank and SBI Digital Asset Holdings, which demonstrated that trading in a permissioned liquidity pool protocol improves efficiency and minimizes risks. The use of tokenized assets also enables atomic settlement, further enhancing the benefits.

The second test case centered around trade finance and involved Standard Chartered Bank’s tokenization of asset-backed securities. This model repackages trade finance receivable assets as fungible tokens and divides them into different tranches with varying risk exposures. The report concluded that trading in the less risky tokens, known as “senior” tokens, can expand the investor base for real economy assets.

The third test case focused on OTC-structured notes, a popular wealth management product in Asian wealth centers. Currently, issuing such notes involves manual processes and requires significant servicing. A network created by HSBC, Marketnode, and United Overseas Bank introduced a token factory concept, where whitelisted parties on a public, permissionless platform can efficiently create and distribute OTC-structured notes. This approach enhances efficiency and aligns with industry-wide efforts to establish common standards for asset issuance and exchange.

Project Guardian, launched in May 2022, will continue exploring other themes such as Trust Anchors and Institutional DeFi, as the MAS remains committed to fostering innovation and advancing the adoption of digital assets in Singapore’s financial ecosystem.

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