Singapore Begins Trials for Digital Asset Tokenization Project -Breaking
- It aims at testing the use of blockchain technology to improve the local finance system and the feasibility of making the city state a hub for decentralized financing.
- Many exchanges left Singapore after last year’s end due to regulatory pressures and the slow turnaround in operating licence approvals.
Singapore launched its digital asset tokenization program, which aims to investigate further the possible uses of blockchain technology. Bloomberg reported that Singapore is striving to become a global hub for decentralized financing.
Singapore Deputy Prime Minister Heng Swee Keat explained in a statement on Tuesday that ‘Project Guardian’ was the result of a collaboration between the Monetary Authority of Singapore (MAS) and a number of foreign and local banks.
This study aims to verify whether decentralized financing (DeFi) and application for asset tokenization can be made viable on the local market. It also identifies the financial risk to Singapore’s integrity and stability.
The Intense Regulator Has Driven Cryptoplayers Away
The project is a government initiative that has been developed in response to several key players in the crypto industry opting to move to other, more attractive markets since the end of last year as a direct result of Singapore’s increased regulatory guidelines.
Project Guardian is designed to promote the sector and evaluate different areas of blockchain technology. This includes trust anchors, institutional-grade DeFi protocols, and open, interoperable networks.
Keat has stated that Keat is directing the pilot program. JP Morgan Chase (NYSE:) & Co, DBS Bank Ltd, and Marketnode Pte. This project will explore the possible application areas of DeFi in wholesale financial market.
This was possible by creating an authorized liquidity pool, which included tokenized deposits and bonds.
“Taking advantage of the benefits of DeFi, while mitigating its risks”
Singapore’s regulator was one of the first in the world to begin investigating the uses and applications of blockchain technology. The city’s licensing scheme for DeFi firms was frustrating. Many prominent companies were frustrated and eventually decided to move on due to slow approvals.
This was further made worse by the fact that the government earlier in this year had banned digital asset advertisement to protect investors from scams. To comply with the government’s guidelines, companies in this sector had to remove cryptocurrency ATMs from their premises.
Many established companies have chosen to relocate their operations to Dubai due to the regulatory requirements. Bybit Fintech Ltd., Three Arrows and Binance Holdings Ltd. are just a few of those who have moved to Singapore because of the convenience offered by Dubai.
“Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem,” explained MAS Chief Financial Technology Officer Sopnendu Mohanty.
He added: “The learnings from Project Guardian will serve to inform policy markets on the regulatory guardrails that are needed to harness the benefits of DeFi, while mitigating its risks.”