MAS to drive digital assets trading, announces plans for more tokenisation
While there is ‘greater momentum’ in financial services, the process has yet to achieve industry-wide scale, says central bank official
SINGAPORE’S central bank on Monday (Nov 4) said that asset tokenisation across financial services is reaching an “inflexion point”, as it announced plans to drive adoption of the process in this industry.
Asset tokenisation refers to the process of digitally representing assets on the blockchain.
Leong Sing Cheong, deputy managing director for markets and development at the Monetary Authority of Singapore (MAS), said that while there is “greater momentum” towards tokenisation in financial services, it has yet to achieve industry-wide scale.
MAS last year put forward a vision of financial assets being transacted across multiple trading platforms through digital assets, digital money and interoperable digital networks, he noted, adding that central banks have been active in exploring the use and development of central bank digital currencies.
“All these efforts point to the fact that interest and investment in asset tokenisation is deepening across asset classes, jurisdictions and currencies,” Leong said at the inaugural Layer One Summit on Monday.
“However, my sense is that we have reached an inflexion point.”
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He added: “Notwithstanding the significant efforts of various players to push the boundaries of tokenisation in financial services, no one has really succeeded in achieving scale.”
Many “promising” use cases have not yet gained industry-wide traction, and there is a need for supporting infrastructure to enable good use cases to expand, he also said.
New measures
In a separate press release, MAS announced various initiatives to address that.
Among them is supporting industry efforts to build commercial networks for payments, capital raising, and secondary trading of tokenised assets. This is as deeper liquidity across primary and secondary markets is vital for tokenisation to be viable, MAS said.
The agency had previously set up an initiative called Project Guardian to carry out industry trials, and it is now facilitating the formation of commercial networks. This is as the involvement of multiple participants, alongside support for multi-asset and multi-currency transactions, can engender deeper liquidity for tokenised asset transactions.
To that end, the Guardian Wholesale Network Industry Group – a multi-member network built by Citi, HSBC, Schroders, Standard Chartered and UOB with the purpose of commercialising and scaling their respective asset tokenisation trials – was formed.
The absence of universal standards for digital assets raises the costs of adopting them, as financial institutions need to invest in and support different technologies, said Leong.
The Guardian Fixed Income Framework will address this, as it is built to allow for a “standardised approach” towards tokenisation in fixed income markets. An equivalent framework for asset and wealth management will be the Guardian Funds Framework, said MAS.
Other new initiatives include the launch of a wholesale central bank digital currency, dubbed the SGD Testnet, to provide financial institutions with access to common settlement assets for market testing purposes.
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