MAS Launches New Frameworks To Make Singapore a Hub for Tokenized Assets

Key Takeaways

• Singapore’s MAS has launched two new frameworks to standardize tokenized assets in fixed income and funds.
• The frameworks aim to increase market liquidity and simplify the adoption of tokenized assets.
• Over 40 financial institutions and policymakers from seven countries collaborated on the project.

The Monetary Authority of Singapore (MAS) has unveiled two new frameworks  designed to drive the adoption of tokenized assets.

The Guardian Fixed Income Framework and the Guardian Funds Framework establish industry standards and guidance to help financial institutions effectively navigate the expanding world of tokenized assets.

These frameworks represent a major step in MAS’s commitment to innovation, aiming to streamline operations and set clear pathways for institutions entering the emerging sector.

Singapore Unveils Landmark Frameworks for Tokenized Assets

The Guardian Fixed Income Framework is designed to promote the adoption of tokenized fixed-income solutions, enhance capabilities, and provide guidelines for deploying tokenization in debt capital markets.

This framework will help financial institutions leverage the benefits of tokenization, including increased efficiency and improved liquidity.

Meanwhile, the Guardian Funds Framework offers best practices for the industry, including clauses that enable the creation of tokenized investment vehicles with various assets.

This framework will facilitate the development of new tokenized products, providing investors with more options and financial institutions with new revenue streams.

According to Leong Sing Chiong, MAS’ Deputy Managing Director, there is a strong demand for tokenized assets, particularly in the foreign exchange and fixed-income sectors.

“MAS has seen strong interest in asset tokenization in recent years, notably in fixed income, FX, and asset management. We are encouraged by the keen participation from financial institutions and fellow policymakers to co-create industry standards and risk management frameworks to facilitate commercial deployment of tokenized capital markets products and scale tokenized markets on an industry-wide basis.”

The MAS has worked closely with over 40 financial institutions, industry groups, and foreign policymakers from seven countries to develop these frameworks.

Fifteen industry trials have been conducted in six currencies, focusing on the application of asset tokenization in capital markets.

The MAS’ Primary Goal

The ultimate goal of these frameworks is to enhance market liquidity by linking a wider range of participants’ goods and services across different currencies and assets.

The MAS hopes that this initiative will lead to greater gains in capital raising and settlement of tokenized assets, improving primary and secondary market liquidity for transactions using tokenized assets.

As part of this initiative, the MAS is set to offer financial institutions access to common settlement assets, including wholesale CBDC, for market testing.

The initial test network, known as the SGD Testnet, will allow for payments and securities settlements, featuring automated and conditional triggers for tokenized transactions.

This will facilitate interoperability with existing financial market infrastructures, allowing qualified financial institutions to settle transactions using wholesale CBDC through the SGD Testnet.

Several major financial institutions, including DBS, OCBC, Standard Chartered, and UOB, are among the first to participate in the project.