On 4 November 2024, the Monetary Authority of Singapore (MAS) announced plans to support the commercialisation of asset tokenisation in financial services through its expanded initiatives. The MAS will connect a broader set of participants’ products and services across multiple currencies and assets. This is anticipated to enhance fund raising, secondary trading, asset servicing and tokenised asset settlement. 

Deepening liquidity of tokenised assets

During his keynote address at the Insights Forum 2024, MAS Deputy Managing Director (Markets and Development) Leong Sing Chiong addressed the four requirements for commercialisation, which will include deepening liquidity of tokenised assets through the formation of commercial networks, developing an ecosystem of market infrastructures, fostering industry frameworks for tokenised asset implementation and enabling access to common settlement facility for tokenised assets. 

Under Project Guardian, MAS’ asset tokenisation initiative launched in May 2022, the financial regulator has convened more than 40 financial institutions, industry associations and international policymakers across seven jurisdictions to conduct industry trials on asset tokenisation in capital markets. So far, project participants have carried out more than 15 industry trials in six currencies across multiple financial products.  

Developing ecosystem of market infrastructures

In 2023, MAS launched the Global Layer One (GL1) initiative to advance the development of foundational digital infrastructures to facilitate digital asset transactions globally.  

Global banks, including BNY, Citi, J.P. Morgan, MUFG and Societe Generale-FORGE, have been at the forefront of efforts to define the GL1 Platform’s business, governance, risk, regulatory and technology requirements since its launch. 

The participation of Euroclear, HSBC and other global market infrastructure providers will enhance GL1’s capabilities and facilitate the adoption of digital asset securities control principles. GL1 will specifically focus on the following additional activities: Control Principles, Specifications and Compliance by Design.

Industry frameworks for implementation of tokenised asset

MAS published two industry frameworks developed by Project Guardian industry group members, the Guardian Fixed Income Framework (GFIF) and the Guardian Funds Framework (GFF), to facilitate broader acceptance and consistent implementation of tokenised assets by financial institutions.  

Guardian Fixed Income Framework (GFIF) integrates standards from industry associations such as the International Capital Market Association, whereas the GFF recommends best practices for tokenised funds.  

Common settlement facility for tokenised assets

Since MAS aims to promote confidence in the settlement of tokenised assets in financial markets, financial institutions will have easier access to common settlement assets, such as Singdollar wholesale Central Bank Digital Currency (CBDC), for market testing purposes.  

The SGD Testnet, or the initial test network, will offer three key features: settlement facility, programmability and interoperability.  

Participants in MAS’ real-time gross settlement system projects will have access to the test network. Financial institutions like DBS, OCBC, Standard Chartered and UOB will be among the first set of participants to test use cases related to payments and securities settlement.  

For more information about this development, please contact our team. To learn about our digital asset solutions, click here.  

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