Monetary Authority of Singapore will investigate DeFi applications in wholesale finance markets by building a liquidity pool of tokenized bonds and deposits as part of this initiative
The concept will use licenced financial institutions as "trust anchors," with JP Morgan, DBS Bank, and Marketnode, the SGX joint venture for bonds, participating in a test. As one of the few major authorities to do so, MAS has taken the lead in researching the future of finance via DeFi protocols. If successful, it might help Singapore solidify its status as a worldwide financial hub.
Tuesday's announcement of Project Guardian at the Asia Tech x Singapore Summit was led by Heng Swee Keat, Deputy Prime Minister and Minister Coordinating for Economic Policies. MAS will investigate uses of decentralised finance (DeFi) in wholesale financing markets by developing a liquidity pool of tokenized bonds and deposits to execute borrowing and lending on a public blockchain network.
According to Dr. Sopnendu Mohanty, the chief fintech officer of the MAS, insights from Project Guardian will be used to teach policy markets on the regulatory guardrails necessary to deploy DeFi while limiting its risks.
In their wholesale banking activities, both DBS and JPMorgan have experience producing digital assets and blockchain technology. DBS issued a $11 million digital bond in a security token sale in 2017. (STO). JPMorgan's Onyx Digital Assets Network has processed over $300 billion in transactions since its debut in 2020.
DBS Bank has been working in the cryptocurrency business for some years, and in December 2020, it will launch its own institutional-grade bitcoin exchange. The company has been gradually expanding the supported digital asset services on the exchange, including the introduction of a crypto trust solution in May 2021.