Singapore central bank reports trials of tokenized asset network models.

The Monetary Authority of Singapore (MAS) and 11 financial institutions analyzed infrastructure models to facilitate the trading of tokenized assets. The MAS released its Project Guardian report on June 26, stating that the key to unlocking the full benefits of the technology is open and interoperable digital asset networks.

The report identified options for platform type, asset type, and network access, with an eye on best practices, using three test cases. However, it carefully noted that it does not endorse any of them. The first use case was over-the-counter (OTC) foreign exchange transactions. The second use case was trade finance focused on Standard Chartered Bank’s asset-backed securities tokenization. The third use case was OTC-structured notes.

The report suggested that trading in a permissioned liquidity pool protocol could achieve greater efficiency by reducing friction and minimizing risks, while tokenized assets bring the benefits of atomic settlement. It also concluded that trading in the “senior,” less risky tokens would broaden the investor base for real economy assets.

HSBC, Marketnode, and United Overseas Bank produced OTC-structured notes in a “token factory” by whitelisting parties on a public, permissionless platform, resulting in greater efficiency in creating and distributing the notes. These institutions are part of an industry-wide effort to establish common standards for asset issuance and exchange.

Project Guardian was launched in May 2022 and will continue to examine other focused themes of Trust Anchors and Institutional DeFi.