Project Guardian: 2024 Reflections, 2025 Directions
Project Guardian, spearheaded by the Monetary Authority of Singapore (MAS), is a collaborative initiative driving tokenized finance innovation. With contributions from over 40 financial institutions, policymakers, and associations, this session provided insights into Project Guardian's achievements and future directions.
Achievements to Date:
SBI Digital Asset Holdings:
- Pioneering Tokenization: Successfully validated tokenized securities concepts, focusing on retail distribution across borders (e.g., Japan, Singapore, Switzerland).
- Progress: Operationalised end-to-end value chains in select corridors, highlighting the need for global regulatory alignment.
- Key Insight: Tokenization is no longer conceptual but commercial-ready, with active client onboarding.
DBS:
- Technological Breakthroughs:
- Proven atomic trading, settlement, and custody using tokenized securities.
- Introduced solutions for Treasury Tokens (e.g., for intra-company FX transactions) and tokenized bonds on DBS Digital Exchange.
- Global Infrastructure: Advocates for a robust private-public blockchain network to address cost and regulatory challenges.
Schroders:
- Asset Management Evolution:
- Tokenized insurance-linked securities (ILS) and experimented with decentralised finance (DeFi) models.
- Emphasised the potential of composable finance frameworks to digitise entire financial value chains.
- Strategic Transition: Moves towards democratizing asset management, offering institutional-grade services to retail clients.
UK FCA:
- Regulatory Leadership:
- Launched the Digital Securities Sandbox, enabling the temporary relaxation of rules to test and refine tokenized models.
- Outlined a blueprint for fund tokenization in the UK, ensuring a tech-neutral and outcomes-focused regulatory approach.
- Global Coordination: Actively engages with MAS and international bodies to align cross-border regulatory standards.
Challenges and Lessons Learned:
1. Regulatory Disparity:
- Variances in global regulatory frameworks hinder seamless cross-border tokenized asset distribution.
- Solution: Develop a global taxonomy for tokenized securities to harmonize interpretations and requirements.
2. Consumer Education:
- Limited understanding of tokenized products among retail investors.
- Solution: Incorporate financial literacy programs alongside product launches to enhance adoption.
3. Accounting Standards:
- Inadequacies in current accounting rules (e.g., treating digital currency as inventory rather than cash) add complexity.
- Solution: Align accounting practices with tokenized finance innovations.
4. Legacy Systems vs. New Infrastructure:
- Tokenization achieves limited efficiencies within legacy systems.
- Solution: Focus on end-to-end digital infrastructure to maximize tokenization benefits.
Future Directions:
Commercialization:
- 2025 poised to be a pivotal year for product launches and market adoption beyond proof-of-concept trials.
- SBI to commercialize tokenized asset-backed securities (ABS) with Switzerland as a key jurisdiction.
- DBS to expand tokenized private debt and equity offerings.
Global Collaboration:
- Strengthening international corridors to support tokenized securities (e.g., Singapore-UK, Singapore-Switzerland).
- Enhance participation in global standard-setting bodies like IOSCO.
Expanding Use Cases:
- Development of tokenized Treasury systems for corporate FX transactions.
- Exploration of tokenized funds and private market assets to broaden investor access.
Closing Remarks:
The session underscored Project Guardian’s transition from pilots to real-world applications, with 2025 set to be a milestone year for tokenized finance. A collective push towards harmonized regulations, consumer education, and composable frameworks is critical to scaling tokenized financial systems globally.
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Speakers:
- Fernando Luis Vázquez Cao, Chief Executive Officer, SBI Digital Asset Holdings
- Han Kwee Juan, Group Executive & Country Head, DBS Singapore, DBS Bank
- Peter Hilborne, Chief Operating Officer, Operations, Schroders Investment Management
- Sarah Pritchard, Executive Director of Supervision, Policy and Competition - Markets and Executive Director of International, Financial Conduct Authority
Moderator:
- Alan Lim, Director & Head, Financial Infrastructure and Artificial Intelligence Office, Monetary Authority of Singapore