Singapore’s MAS Proposes Framework for Open and Interoperable Digital Asset Networks

The Monetary Authority of Singapore (MAS) has released a report outlining a framework for the development of open and interoperable networks for digital assets. The report, titled “Enabling Open & Interoperable Networks,” was collaboratively developed with subject matter experts from the Bank for International Settlements’ (BIS) Committee on Payments and Market Infrastructure (CPMI) and received contributions from participating financial institutions.

The publication also examines the application of CPMI-IOSCO principles for financial market infrastructures to evolving models of digital asset networks, drawing insights from industry pilots conducted under MAS’ Project Guardian. This initiative, in partnership with the financial industry, tests the feasibility of asset tokenization and Decentralized Finance (DeFi) applications. MAS aims to ensure that emerging digital asset networks are supported by international standards that promote secure and efficient financial market infrastructure.

In addition to the framework, MAS has announced the expansion of Project Guardian to explore asset tokenization across various financial asset classes. To facilitate this expansion, MAS has formed the Project Guardian Industry Group, comprising 11 financial institutions. These institutions will lead industry pilots in asset and wealth management, fixed income, and foreign exchange.

The pilots in the asset and wealth management sector cover a range of initiatives, such as digital structured products and tokenized investment vehicles. Successful technical pilots have been conducted by HSBC, Marketnode, and UOB, demonstrating the potential for cost reduction, customization, and broader distribution within the structured product chain. UBS Asset Management will launch a pilot for the native issuance of a Variable Capital Company (VCC) fund on digital asset networks, aiming to enhance fund distribution and secondary market trading. Schroders is partnering with Calastone to explore tokenized investment vehicles that wrap and issue traditional investment securities.

In the fixed income and foreign exchange sectors, pilots involve tokenized asset-backed securities, bonds, and bank liabilities. Standard Chartered, in collaboration with Linklogis, has developed a platform for the issuance of asset-backed security tokens listed on the Singapore Exchange. DBS Bank, SBI Digital Asset Holdings, and UBS AG are conducting a pilot repo agreement with natively issued digital bonds. Citi is testing the pricing and execution of digital asset trades on a distributed ledger, leveraging ledger data to improve post-trade reporting and analytics.

Furthermore, MAS welcomes the Financial Services Agency (FSA) of Japan as the first overseas financial regulator to join Project Guardian, facilitating collaboration on digital asset innovation and best practices for asset tokenization while ensuring financial stability and integrity.

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