Singapore plans further commercialization of tokenized assets to ‘deepen liquidity’

The Monetary Authority of Singapore has introduced two new industry frameworks focusing on fixed-income industry groups and funds, as it continues to support the commercialization of asset tokenization.

The city-state’s central bank said today that it plans to “advance tokenization in financial services” and published two industry frameworks developed by members of Project Guardian, an initiative led by MAS to enhance the efficiency of financial markets through tokenization.

The first framework, dubbed “Guardian Fixed Income Framework,” provides a guide to implementing tokenization in debt capital markets. “Tokenization of fixed income instruments could realize tangible benefits regarding transparency, efficiency in trading and reduction in settlement times across market participants,” the report said. 

“The industry group aims to support the growth and maturation of tokenized fixed income assets, with a view to ultimately enhancing its appeal and accessibility to a broader range of investors, issuers, banks and services providers,” the report also said.

Meanwhile, the other “Guardian Funds Framework” aims to provide a set of recommendations for industry best practices for tokenized funds. “This includes the Guardian Composable Token Taxonomy to facilitate the development of tokenized investment vehicles comprising multiple assets, simplifying the process of incorporating new tokenized funds, and helping achieve efficiencies in fund settlement,” the MAS said in the Monday statement.

The MAS launched Project Guardian in 2022 and has so far conducted over 15 industry trials in six currencies across multiple financial products on the use of asset tokenization in capital markets. More than 40 financial institutions, industry associations and policymakers across seven jurisdictions have participated in the trials.

Deepening liquidity

MAS also said today that greater improvements in capital raising, secondary trading, asset servicing and settlement of tokenized assets may be realized by connecting a broader set of participants’ products. 

“This will deepen liquidity across primary and secondary markets for tokenized asset transactions,” the MAS said, adding that Citi, HSBC, Schroders, Standard Chartered and UOB have formed the “Guardian Wholesale Network” industry group, to commercialize their asset tokenization trials and scale usage.

Leong Sing Chiong, deputy managing director of MAS, said that MAS has seen “strong interest in asset tokenization in recent years, notably in fixed income, FX, and asset management.”

“As Project Guardian participants commercialize their products and services following successful industry trials, MAS is facilitating commercialization to take place in a coordinated, networked manner,” the central bank said.