Summary report of the Guardian roundtable which took place at Elevandi Insights during the Singapore FinTech Festival 2023
Through Project Guardian, a significant collaborative effort launched in May 2022 by the Monetary Authority of Singapore (MAS), industry stakeholders are working to chart a path forward.
As part of the initiative, 17 leading global financial institutions including Standard Chartered have carried out successful pilots across areas like wealth management, foreign exchange, fixed income and trade finance to explore the economic potential and value-adding use cases of asset tokenisation.
During a roundtable held during the Singapore FinTech Festival 2023 and led by policymakers such as Alan Lim, head of the MAS FinTech Infrastructure Office, a number of Project Guardian stakeholders came together to distil the lessons learnt so far, and four actionable outcomes emerged.
Project Guardian’s industry pilots have proven that tokenised financial assets can be
A further key focus is on increased collaboration and experimentation between regulators and industry to bridge diverse perspectives and priorities. During the discussion, financial institutions cited legal and regulatory uncertainties as major impediments to advancing pilot projects and broader experimentation. Regulators, on the other hand, say they are mindful of the long timelines often involved in regulatory changes and advocate for a balanced approach that fosters innovation while mitigating risks.
To drive regulatory alignment and bring in an international perspective on facilitating cooperation, a policymaker group has been convened, comprising MAS, IMF representatives, Japan’s Financial Services Agency, the UK’s Financial Conduct Authority and the Swiss Financial Market Supervisory Authority.
Addressing practical challenges will be key to scaling solutions
The wealth of pilot projects has enabled the identification of numerous practical challenges to the real-world application of tokenisation. For many participants at the Project Guardian roundtable, the transition of assets onto blockchain platforms raises concerns about fragmenting liquidity pools in traditional markets – an issue that must be addressed either by bridging these new systems to existing markets or building sufficient liquidity within the blockchain ecosystem itself.
Linked to this is the critical need for interoperability and standardisation between various ledgers, currencies, and institutions. Establishing common standards for asset definitions and the exchange of key reference information will be crucial to ensuring seamless transactions and interactions. Recent cross-industry collaboration – such as the development of a catalogue of trade finance APIs by International Chamber of Commerce and SWIFT members – demonstrates that this hurdle is far from insurmountable, although the challenge is compounded by the diversity of current systems and the need for synchronisation across them.
Custody models are also in a state of evolution. While initial projects opted for participant self-custody due to its simplicity, scalable and real-world applications will need more sophisticated solutions that can cater to diverse regulatory landscapes, especially regarding the cross-border movement of assets.
Looking back at the lessons learned so far, Project Guardian participants emphasise the
Rather than an overnight revolution, the adoption of tokenisation is likely to be a gradual process. A key to this transition is education, which will play an important role in shifting the industry’s focus from mere proofs-of-concept to the deployment of real products.
As Project Guardian moves into its next phase, stakeholders from all areas have an unprecedented opportunity to shape the financial ecosystem of the future – and the possibilities are nearly endless.