Japanese and Singaporean regulators join forces on crypto pilot project

On June 26, Japan's financial regulator, the Financial Services Authority (FSA), announced a camaraderie with the Monetary Authority of Singapore (MAS) for joint regulation and pilot testing of cryptocurrency projects in accordance with the latter's "Project Guardian" initiative. Participation will be limited to the observer capacity of the FSA in its current phase. The regulators wrote:

“The project aims to test the feasibility of applications of digital technologies such as asset tokenization through pilot experiments, while managing risks to financial stability and integrity. Current industry pilots include fixed income, currencies, and asset and wealth management.”

Established in May 2022 by MAS, Guardian Project seeks to test the "viability of applications in asset tokenization and DeFi", according to the appropriate regulations. The project has four focus areas: open and interoperable networks, trust anchors, asset tokenization, and institutional-grade DeFi protocols. In a notable initiative project:

"DBS Bank, JP Morgan and SBI Digital Asset Holdings conducted foreign exchange and government bond transactions against liquidity pools comprising of Tokenized Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD). )".

Meanwhile, HSBC, Marketnode and UOB have since completed a pilot test of a structured blockchain product, while UBS is exploring the issuance of private equity company funds on digital asset networks. Project Guardian is not the first collaboration between FSA and MAS. In 2017, the two regulators established a joint fintech cooperation framework to promote innovation in their respective markets.

The collaboration also follows a period of relaxation of crypto laws in Japan. On June 25, Cointelegraph reported that Japan's National Revenue Agency ruled to exempt token issuers from a 30% tax on unrealized capital gains. Earlier this year, Japanese Prime Minister Fumio Kishida said that decentralized autonomous organizations and non-fungible tokens could help support the government's “Cool Japan” strategy while exploring the use of Web3.

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