The Monetary Authority of Singapore (MAS), also the central bank, has released a report on the framework for creating interoperable networks for digital assets. The report is part of the regulator's measures to ensure that emerging digital asset networks are safe and efficient.

Dubbed 'Enabling Open & Interoperable Networks', the report was developed in collaboration with experts at the Bank of International Settlements (BIS), Committee on Payments and Market Infrastructure (CPMI). The project also attracted contributions from participating financial institutions, according to a statement published today (Monday).

Evolving Digital Networks

Furthermore, the report considers the application of the CPMI-IOSCO principles for financial market infrastructure to the evolving models of digital networks. The principles focus on the international standards for payments systems, central securities depositories, securities settlements, central counterparties, and trade depositories.

Additionally, MAS has announced an expansion of the 'Project Guardian' to assess the potential of asset tokenization across more financial asset classes. In this regard, MAS has established the Project Guardian Industry Group, which brings together 11 financial institutions. Project Guardian is the regulator's initiative to test the feasibility of asset tokenization and Decentralized Finance (DeFi).

The enlisted financial institutions in the initiative would test asset tokenization Tokenization Tokenization represents the process of substituting a sensitive data element with a non-sensitive equivalent, i.e. token, which bears no extrinsic or exploitable meaning or value. In essence, the rights to the ownership of an asset are converted into a digital token. Tokenization can be used to own an entire unit of an asset. For example, one token that represents the ownership of a piece of real estate or to split ownership of a single unity of an asset such as 200,000 tokens, each one represen Tokenization represents the process of substituting a sensitive data element with a non-sensitive equivalent, i.e. token, which bears no extrinsic or exploitable meaning or value. In essence, the rights to the ownership of an asset are converted into a digital token. Tokenization can be used to own an entire unit of an asset. For example, one token that represents the ownership of a piece of real estate or to split ownership of a single unity of an asset such as 200,000 tokens, each one represen Read this Term across financial asset classes. Major banks, including HSBC, Standard Chartered, Citi, and DBS, would carry out pilot studies across wealth management, fixed income, and foreign exchange, the regulator noted.

According to MAS' past statements, the regulator has shown commitment to the technologies underpinning digital assets. However, the watchdog is keen to restrict the risks associated with digital assets, including stablecoins and CBDCs.

MAS Explore Efficiency in Digital Networks

Leong Sing Chiong, MAS' Deputy Managing Director of Markets and Development, commented: "While MAS strongly discourages and seeks to restrict speculation in cryptocurrencies, we see much potential for value creation and efficiency gains in the digital asset ecosystem."

Most recently, MAS proposed standards for the use of digital money, including CBDCs and tokenized bank deposits on a distributed ledger. The proposal looked into how settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term efficiency, merchant acquisition, and user experience in digital assets can be achieved.

The technical paper was produced in partnership with the International Monetary Fund (IMF), Bank of Italy, and Bank of Korea, among other financial institutions.