The Monetary Authority of Singapore Introduces New Frameworks for Tokenization

The Monetary Authority of Singapore (MAS) has launched two new industry frameworks focused on the fixed-income sector and funds, to advance the commercialization of asset tokenization.

On [date], the city-state’s central bank announced plans to “advance tokenization in financial services” and published two frameworks developed by Project Guardian, an MAS initiative aimed at enhancing financial market efficiency through tokenization.

Guardian Fixed Income Framework

The first framework, named Guardian Fixed Income Framework, is designed to guide the implementation of tokenization within debt capital markets. According to the report, “Tokenization of fixed income instruments could yield real benefits in transparency, trading efficiency, and reduced settlement times among market participants.”

The report further states, “This industry group seeks to support the growth and maturation of tokenized fixed income assets, ultimately enhancing accessibility for a wider range of investors, issuers, banks, and service providers.”

Guardian Funds Framework

The second framework, Guardian Funds Framework, aims to establish recommendations for industry best practices regarding tokenized funds. This includes the Guardian Composable Token Taxonomy, which facilitates the creation of tokenized investment vehicles containing multiple assets. This simplifies the incorporation of new tokenized funds and helps achieve efficiency in fund settlement.

Since its launch in 2022, Project Guardian has conducted over 15 industry trials in six currencies across various financial products related to asset tokenization in capital markets. More than 40 financial institutions, industry associations, and policymakers from seven jurisdictions have participated in these trials.

Deepening Liquidity

MAS also indicated that improvements in capital raising, secondary trading, asset servicing, and the settlement of tokenized assets could be achieved by connecting a wider array of participants’ products. “This will deepen liquidity in primary and secondary markets for tokenized asset transactions,” the MAS noted, announcing that major institutions such as Citi, HSBC, Schroders, Standard Chartered, and UOB have established the Guardian Wholesale Network industry group to commercialize their asset tokenization trials and scale usage.

Leong Sing Chiong, deputy managing director of MAS, noted strong interest in asset tokenization recently, particularly in fixed income, foreign exchange (FX), and asset management sectors. “As Project Guardian participants commercialize their products and services following successful trials, MAS is facilitating this commercialization in a coordinated, networked fashion,” said the central bank.