As asset tokenization continues apace, the Monetary Authority of Singapore (MAS) and 11 financial institutions examined infrastructure models to facilitate trading in tokenized assets. The key to unlocking the full benefits of the technology is open and interoperable networks of digital assets, MAS said in its Project Guardian report. released June 26th.
Project Guardian identified options for platform type, asset type, and network access with a view to best practice. He used three test cases and drew observations on them, while carefully noting that he doesn't support any of them.
The first use case was over-the-counter (OTC) currency transactions. A detailed examination highlighted a collaboration between DBS Bank and SBI Digital Asset Holdings. concluded:
"Trading in a permissioned liquidity pool protocol achieves greater efficiency by reducing friction and minimizing risk, while tokenized assets provide the benefits of atomic settlement."
The second use case was trade finance and focused on the tokenization of asset-backed securities from Standard Chartered Bank. In this model, tokenized trade finance receivables assets are repackaged as natively issued fungible tokens and divided into two tranches with different risk exposures. Trading โseniorโ and less risky tokens would โbroaden the investor base for real economy assets,โ the report concluded.
Related: Tokenization of illiquid assets to reach $16 trillion by 2030: Report
The third use case was OTC structured notes, which are "a popular wealth management product with substantial traction and demand in Asian wealth centers." Currently, the issuance of such notes is labor intensive and has manual elements, and the notes require a high level of service.
.@MAS_sg published a report proposing a framework for designing open and interoperable networks for #digital resources. MAS also announced an expansion of Project Guardian to test the potential of asset tokenization across more financial asset classes.
READ: https://t.co/KXZ8FTqlUp pic.twitter.com/jSnVO9APLM
โ MORE (@MAS_sg) June 26, 2023
A network created by HSBC, Marketnode and United Overseas Bank produces OTC structured notes in a "token mill" by whitelisting parties on a public platform without permission, resulting in greater efficiencies in creation and distribution of the notes. Those institutions are part of an industry-wide effort to establish common standards for the issuance and exchange of assets.
project guardian launched in May 2022. It will continue to examine "other focused issues of Trust Anchors and Institutional DeFi."
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