The efforts, collectively termed Project Guardian, aim to facilitate institutional adoption of digital assets with the objective of enhancing liquidity, unlocking investment opportunities, and improving the overall efficiency of the financial market.
Under Project Guardian, an industry group consisting of 17 financial institutions has initiated five new industry pilots to test various asset tokenization use cases. These pilots cover aspects such as pricing and executing bilateral digital asset trades efficiently, exploring real-time post-trade reporting and analytics, cross-border FX payment solutions, treasury management solutions for global liquidity management, and the issuance of a tokenized money market fund.
Citi, T. Rowe Price Associates, Inc., Fidelity International, BNY Mellon, OCBC, Ant Group, Franklin Templeton, J.P. Morgan, and Apollo are among the most important participants in these pilots, each focusing on specific aspects of digital asset utilization within the financial industry.
Responding to increased interest from the funds industry, the MAS is introducing a new funds workstream within the Project Guardian industry group. This workstream will specifically focus on the native issuance of Variable Capital Company (VCC) funds on digital asset networks, addressing tax, policy, and legal considerations while expanding distribution channels for asset managers.
At the same time, the MAS is working on digital infrastructure initiatives in collaboration with international policymakers and financial institutions, including BNY Mellon, DBS, JP Morgan, and MUFG.
The initiative known as Global Layer One (GL1) aims to design an open digital infrastructure to host tokenized financial assets and applications. This infrastructure is envisioned to facilitate seamless cross-border transactions and enable the trading of tokenized assets across global liquidity pools, adhering to relevant regulatory requirements.
Additionally, MAS is collaborating with the financial industry to develop an Interlinked Network Model (INM), serving as a common framework for exchanging digital assets across independent networks. This model enables financial institutions to transact with each other without requiring all participants to be on the same network.
The International Monetary Fund (IMF) staff has joined Project Guardian's policymaker group, providing an international perspective on policies and legal issues related to cross-border platforms and the stability of the international monetary system.
Representatives from MAS emphasised the successful demonstration of tokenized financial assets in Project Guardian's industry pilots. To fully realise the potential of tokenized markets, they highlighted the need for scalable digital infrastructure, with GL1 envisioned to serve as a foundational digital backbone fostering openness and accessibility similar to the public internet.
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