Citi and Fidelity Demonstrate Onchain Real-Time Forex Swap Proof-of-Concept

SUMMARY

Citi and Fidelity developed an onchain proof-of-concept for real-time forex swaps within a money-market fund under MAS’s Project Guardian.
The demo, showcased at the Singapore Fintech Festival, highlights real-time multi-asset settlement capabilities for investors.

Two prominent players in traditional banking, Citi and Fidelity, are driving the way in a proof-of-concept (PoC) for a onchain money-market fund (MMF) that consolidates a digital foreign currency (FX) swap. This proof of concept, which will be divulged amid the Singapore Fintech Festival from November 6–8, is anticipated to change the way investors settle multi-asset positions by encouraging real-time processing. By providing access to MMFs in foreign currencies, the effort seeks to open up extra channels for portfolio diversification and yield improvement, subsequently amplifying investment choices past holdings in home currencies.

The PoC, which was created as part of the Monetary Authority of Singapore’s (MAS) Project Guardian, bolsters MAS’s overarching objectives to establish uniform tokenization guidelines for international markets. The essential objective of Project Guardian is to examine how digital finance frameworks, and more particularly tokenization, might serve as the foundation of a secure and viable financial environment. Conventional financial institutions might be altered by tokenization, the process of converting financial resources into digital resources on a blockchain that guarantees to speed up transactions and progress accessibility.

Citi and Fidelity proposed to utilize this digital technique to outline the proficiency enhancements that onchain transactions may provide. In contrast to the customary multi-day settlement window, the PoC envisions a future in which FX swaps settle in real-time, possibly bringing down operating costs and progressing transparency. This advancement may significantly increase FX trading liquidity and support MAS’s mission to streamline and standardize cross-border trading strategies.

By tapping into tokenization, Citi and Fidelity aim to simplify trading for investors, who currently face delays due to intermediaries in conventional settlements. This transition could make cross-currency transactions more fluid, boosting capital efficiency and providing a more reliable way to execute foreign exchange trades. The onchain infrastructure for FX swaps could eventually extend to a range of asset classes, facilitating broader adoption within traditional finance sectors.

Tokenization is rapidly gaining traction among major financial institutions. As Citi and Fidelity illustrate with this initiative, tokenized assets could help reshape global markets, offering both greater security and flexibility. This PoC not only serves as a technical demonstration but as a significant signal of the shifting tides in finance. MAS’s support underscores the potential of tokenization to transform financial infrastructure, bridging traditional finance (TradFi) with decentralized technology.

If successful, the PoC could pave the way for broader integration of blockchain technology in financial systems. Citi and Fidelity’s PoC showcases the potential of tokenization to optimize asset allocation and diversify risk. Through Project Guardian, MAS is committed to fostering innovation in digital finance while adhering to established regulatory standards, potentially making onchain settlements a mainstay in the finance world.