Singapore's central bank is starting to test tokenization use cases alongside major financial services firms including JPMorgan (JPM), DBS (D05) and BNY Mellon (BK).
The tests will examine bilateral digital asset trades, foreign currency payments, multicurrency clearing and settlement, fund management and automated portfolio rebalancing, the Monetary Authority of Singapore (MAS) said Wednesday.
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JPMorgan and Apollo have carried out a "proof of concept" to demonstrate how asset managers could tokenize funds on the blockchain as part of the project, the firms announced concurrently with MAS' statement. The initiative is part of Project Guardian, a policymaker group that includes Japan's Financial Services Agency (FSA), the U.K's Financial Conduct Authority (FCA) and the Swiss Financial Market Supervisory Authority (FINMA) to advance asset tokenization.
The MAS is also exploring the design of a digital infrastructure to host tokenized assets and applications, called Global Layer One (GL1), to enable cross-border transactions and allow tokenized assets to be traded across global liquidity pools.
Tokenization, the term used for minting real-world assets as blockchain-based tokens, is one use case for digital asset technology attracting the attention of the world's most prominent mainstream financial institutions due to its potential to expedite processes and make them more efficient and less costly.
