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.

 

Watch Full Session

 

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
 
 

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