Singapore’s Monetary Authority Advances Asset Tokenization with New Frameworks

SUMMARY

The Monetary Authority of Singapore has introduced two new frameworks to bolster tokenization efforts for funds and fixed-income instruments.
Additionally, the MAS has established a “Guardian Wholesale Network” to enhance the adoption of tokenization practices.

To improve the commercialization of asset tokenization in the fixed-income sector and funds, the Monetary Authority of Singapore (MAS) has released two industry guidelines. This project is a component of MAS’s continuous endeavors to advance tokenization in financial services, which they feel can enhance market efficiency and transparency.

The “Guardian Fixed Income Framework,” the first framework, provides guidelines for tokenization in debt capital markets. It draws attention to the possible advantages, such as improved trade efficiency, decreased settlement times for market players, and increased transparency. By increasing their attractiveness and accessibility to a broader spectrum of investors, issuers, and service providers, the industry organization in question hopes to promote the expansion of tokenized fixed-income assets.

In addition, the “Guardian Funds Framework” is designed to outline best practices for tokenized funds. It introduces the Guardian Composable Token Taxonomy, which aims to streamline the development of tokenized investment vehicles that incorporate multiple assets. This framework is expected to simplify the process of creating new tokenized funds and enhance efficiency in fund settlements.

Project Guardian, launched by MAS in 2022, has conducted over 15 industry trials across six currencies and various financial products, showcasing the application of asset tokenization in capital markets. More than 40 financial institutions and industry stakeholders from seven jurisdictions have actively participated in these trials. By connecting a wider range of participant products, MAS anticipates significant improvements in capital raising, secondary trading, asset servicing, and settlement processes for tokenized assets.

The establishment of the “Guardian Wholesale Network,” which includes prominent firms such as Citi, HSBC, Schroders, Standard Chartered, and UOB, aims to scale the usage of asset tokenization based on successful trials. Leong Sing Chiong, MAS’s deputy managing director, noted the growing interest in asset tokenization, particularly in fixed income, foreign exchange (FX), and asset management.

As Project Guardian participants commercialize their products following successful trials, MAS is committed to facilitating a coordinated approach to commercialization, ensuring the growth of the asset tokenization market. This comprehensive effort will ultimately deepen liquidity across both primary and secondary markets for tokenized assets.