MAS Proposes Framework for Digital Asset Networks

The Monetary Authority of Singapore, MAS, has published a press relase to announce the publication of a new report in relation to the design of open and interoperable networks for digital assets. The report, which is titled „Enabling Open & Interoperable Networks“, was developed jointly by the Committee on Payments and Market Infrastructure (CPMI) of the Bank for International Settlements (BIS), financial institutions participating in digital asset sandboxes, and MAS itself. The report outlines possible network designs thereby focusing on network interoperability, including interoperability between traditional financial market infrastructures and digital ones, to prevent fragmentation, liquidity issues, and arbitrage. The report also presents various case studies to apply the design frameworks presented to real life digital asset sale and purchase activities.
MAS also announced that it has expanded Project Guardian, a collaborative initiative with the financial industry on digital assets, to further explore the potential of asset tokenization across various financial asset classes. To facilitate this expansion, MAS has established the Project Guardian Industry Group, consisting of 11 financial institutions. These institutions will lead various pilot programs in asset and wealth management, fixed income, and foreign exchange.
In the area of asset and wealth management, several pilots are being conducted, including a technical pilot on the issuance and distribution of a digitally native structured product and the issuance of a Variable Capital Company (VCC) fund on digital asset networks, aiming to enhance fund distribution and secondary market trading. Two firms are also exploring the capabilities of a tokenized investment vehicle that can „wrap and issue traditional investment securities using VCCs“. In the field of fixed income and foreign exchange, pilots are being conducted for tokenized asset-backed securities, tokenized bonds, and tokenized bank liabilities.
To conclude, MAS also announced that the Financial Services Authority (FSA) of Japan has now joined Project Guardian as a first overseas financial market regulator which is an important development in the realm of digital asset innovation. By joining forces, MAS and the FSA can share their expertise and best practices in asset tokenization while ensuring the safety and stability of the financial system.