A new initiative by the central bank and financial regulator of Singapore (MAS) wants to explore the potential of decentralized technologies such as blockchain and DeFi. Project Guardian aims to find out the advantages and risks of digital securities and create a new regulatory framework.
Monetary Authority of Singapore (Master’s) will be in Pilot project with the financial industry Collaborate to explore the economic potential and benefits of asset tokenization. The project was coordinated by Deputy Prime Minister W Minister of Economic Policy Heng Swee Keat was presented at the Asia Tech x Singapore Summit. Project Guardian’s findings aim to inform political forces of the regulatory guardrails. These are essential to take advantage of the decentralized finance world (DeFi) while mitigating their risks.
Coding for digital securities
In the past two years, the central bank has granted licenses and approvals in principle to 11 digital payment token providers, including stablecoinPaxos provider. Meanwhile, MAS has consistently warned the public against trading cryptocurrencies and has taken steps to stop advertising cryptocurrencies to the public Reduction. However, in the new cryptocurrency initiative, high-value assets such as real estate and deposits will be digitized. This allows them to divide into parts, on a Blockchain It is displayed and managed by them. Digital securities are backed by an underlying asset, which differentiates them from more volatile tokens such as cryptocurrencies such as Bitcoin (BTC).BTC) Differs.
By purchasing assets, tokenization allows a larger group of borrowers or investors to access previously inaccessible assets. This promotes economic integration and increases liquidity in financial markets. Allow financial services Smart contracts or computer programs running on the blockchain and independent financial transactions (DeFi). They include, for example, borrowing, lending, or trading without an intermediary required. In industry, this is referred to as decentralized, in contrast to traditional finance, where centralized third parties are involved.
Involvement of financial institutions
The project primarily aims to develop and test use cases in four main areas. This includes enabling the trading of digital securities via platforms such as digital exchanges and exploring deposit tokenization. Thus MAS will explore cooperation with regulated financial institutions. Among other things, companies that want to participate in DeFi protocols are vetted by MAS and approved accordingly. The credentials issued will also investigate the introduction of regulatory safeguards and controls for such protocols.
“We believe that these early explorations of DeFi solutions will ensure Singapore’s competitiveness and importance as an evolving financial centre.” – Han Kui Guan, Head of Planning and Strategy at DBS Bank
The first industry pioneer under Project Guardian is the creation of a liquidity pool. This explores the potential application of DeFi for borrowing and lending from bonds and tokenized deposits of large clients. Expanding these developments in collaboration with the central bank of a major financial center could give a new impetus to the adoption of digital assets and blockchain by mainstream financial institutions.