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The Monetary Authority of Singapore (MAS) announced a significant expansion of its initiatives to scale asset tokenisation within the financial services sector. This strategic move includes partnerships with global industry associations and financial institutions aimed at establishing common asset tokenisation standards across various sectors, such as fixed income, foreign exchange (FX), and asset & wealth management.
Over the past two years, MAS has collaborated with 24 financial institutions, including asset managers, market operators, custodians, credit rating agencies, and commercial banks, to pilot promising asset tokenisation use cases under Project Guardian. To enhance traction, MAS is now partnering with global industry associations such as the Global Financial Markets Association (GFMA), International Capital Market Association (ICMA), and International Swaps and Derivatives Association (ISDA).
Building on the success of these initial pilots, MAS will establish three specific workstreams to develop standards and frameworks for key asset classes:
Fixed Income Workstream: This will collaborate with ICMA to develop protocols and data specifications, leveraging ICMA’s Bond Data Taxonomy. It will also focus on identifying necessary risk factors and disclosures for tokenised bond offerings and partnering with GFMA to develop standard clauses for implementing smart contracts in fixed-income products.
FX Workstream: In partnership with ISDA and the GFMA’s Global Foreign Exchange Division (GFXD), this workstream will focus on developing FX data specifications, risk management frameworks, and comprehensive FX documentation.
Asset & Wealth Management Workstream: This will enhance collaboration with global custodians and asset managers to develop common data models and address specific model risk considerations for fund tokenisation.
Scaling tokenised asset transactions globally requires a robust shared ledger infrastructure that supports various tokenised assets while complying with regulatory requirements and maintaining policy autonomy. To address this, MAS is developing the Global Layer One (GL1) initiative in collaboration with international policymakers and financial institutions, including BNY, Citi, J.P. Morgan, MUFG Bank, and Societe Generale-FORGE (SG Forge).
A key outcome of this collaboration is a whitepaper outlining the design principles, objectives, and applications of the GL1 initiative. This document lays the foundation for future developments and the establishment of a non-profit organisation (GL1 Org) to develop common standards for a global shared ledger infrastructure. Additionally, independent companies may be formed to build and deploy the GL1 infrastructure.
Leong Sing Chiong, Deputy Managing Director (Markets and Development) at MAS, emphasised the initiative’s role in understanding the opportunities and risks associated with asset tokenisation while operating within a controlled environment. He highlighted the importance of public-private partnerships in ensuring financial infrastructures meet market needs while maintaining integrity and stability.
The GL1 initiative has garnered widespread praise for its innovative integration of resiliency, risk management, and blockchain technology, effectively addressing both current opportunities and challenges.
Key industry figures have expressed strong support for the GL1 initiative and its potential to revolutionise the financial industry. Experts are enthusiastic about its potential to modernise legacy systems through enhanced interoperability and increased asset mobility, marking a significant step toward a shared digital infrastructure.
The initiative’s transformative power lies in blockchain technology, which requires robust support from both the public and private sectors to succeed. This collaboration is seen as crucial for evolving the global financial industry. Additionally, the GL1 initiative promises to bridge the gap between traditional market infrastructures and blockchain environments, creating a truly interoperable platform for on-chain securities and payment transactions.
The expansion of MAS’s initiatives marks a significant step towards the widespread adoption of asset tokenisation within the financial services industry. Through strategic partnerships and the development of common standards and frameworks, MAS aims to enhance the efficiency and scalability of tokenised assets, ultimately driving innovation and modernisation across global financial markets.
