Singapore’s Central Bank, DBS, and JPMorgan Work Together to Explore Digital Assets’ Applications, Defi

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The Singapore Monetary Authority (MAS) has teamed up with major banks and financial services firms to investigate asset tokenization and decentralized finance (defi). The first project will be piloted by DBS Bank and JPMorgan.

The Monetary Authority of Singapore (MAS), the country’s central bank, announced Tuesday that it has launched Project Guardian in collaboration with the financial services industry. Project Guardian is a “collaborative initiative with the financial industry that seeks to explore the economic potential and value-adding use cases of asset tokenization” and decentralized finance, according to the central bank (defi).

At the Asia Tech x Singapore Summit on Tuesday, Heng Swee Keat, Singapore’s deputy prime minister and coordinating minister for economic policies, announced the start of Project Guardian.

The first industry pilot under Project Guardian will look into potential defi applications in wholesale funding markets, according to the MAS,

The pilot, led by DBS Bank Ltd., JP Morgan, and Marketnode, involves the creation of a permissioned liquidity pool comprising tokenized bonds and deposits.

“The pilot aims to carry out secured borrowing and lending on a public blockchain-based network through execution of smart contracts,” the MAS continued.

Sopnendu Mohanty, chief fintech officer at the central bank, explained that the MAS is “closely monitoring innovations and growth in the digital asset ecosystem and working through the potential opportunities and risks that come with new technologies — to consumers, investors, and the financial system at large.”

He noted: “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.”

Han Kwee Juan, head of group planning and strategy at DBS, Southeast Asia’s largest bank, commented:

DBS is pleased to lead the charge to explore potential digital assets and use of defi concepts that will enhance efficiency and scalability in trading, clearing, and settlement; while managing risks to financial stability and integrity.