Moody’s Joins Project Guardian to Analyze Risks in Tokenized Fixed Income Assets

Moody’s Corporation has announced its participation in Project Guardian, a collaborative initiative led by the Monetary Authority of Singapore (MAS) to explore asset tokenization and enhance financial market efficiency. The credit rating agency will focus on providing risk analysis for tokenized fixed income products within the project’s fixed income workstream.

Launched in 2022, Project Guardian aims to leverage asset tokenization to improve liquidity and efficiency in financial markets while managing risks to financial stability and integrity. The initiative brings together public and private sector participants, including regulators from the UK, Switzerland, and Japan, as well as major financial institutions.

Wendy Cheong, Managing Director and Regional Head of Asia-Pacific for Moody’s Ratings, stated, “Moody’s is entering a new era of brand identity, innovation, and collaboration, and we’re proud to be part of this project at the forefront of asset tokenization.”

As part of its involvement, Moody’s plans to assess risks associated with various tokenized assets, including fixed-income securities, fund units, stablecoins, and tokenized deposits. The company’s independent risk assessment aims to enhance market transparency, reduce systemic risks, and support the growth of the tokenization industry.

Fabian Astic, Managing Director and Global Head of Digital Economy at Moody’s Ratings, expressed enthusiasm about the potential of tokenization to transform the financial landscape. He emphasized the project’s commitment to transparency and the power of collaboration in driving innovation.

Moody’s participation in Project Guardian builds on its existing experience in rating tokenized issuances, including digital bonds issued through the SIX Digital Exchange (SDX) and the first digital fund from Libeara, a tokenization platform founded by Standard Chartered’s SC Ventures.

The tokenization trend has gained significant momentum in 2024, with the value of tokenized funds growing from $100 million to over $1.5 billion since 2023. Major financial institutions, including BlackRock, Franklin Templeton, and UBS Asset Management, have already deployed tokenized funds on public blockchains.

Rajeev Bamra, Moody’s Head of Strategy of Digital Economy, highlighted the potential of tokenization to democratize access to traditionally illiquid assets, enhance transactional transparency, and offer new avenues for fractional ownership across various sectors.

As the project progresses, Moody’s involvement is expected to contribute to the development of robust risk assessment frameworks for tokenized assets, supporting the growth and stability of this emerging market segment.