Singapore Considers Aspects of Tokenization and DeFi Protocols

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The MAS has presented a report summarizing the work with BIS on Project Guardian, an initiative to assess tokenization and DeFi’s compliance with international standards.

It opts for the integration of these protocols into the institutional market infrastructure. The experts tested the “viability” of DeFi applications, and explored potentials to transform real assets into digital tokens without risking global financial stability and integrity.

The paper poses a case for open and interoperable private blockchains to facilitate the exchange of tokenized assets via decentralized financial protocols.

Best practices for DeFi applications were proposed – allowing for the trading of asset classes like stocks, fixed income instruments, foreign exchange, and investment funds to be regulated.

The document structures design options to facilitate similar types of trading using private blockchains. This provides a controlled environment on which all participants are known and trusted entities, thus reducing the chance of fraudulent or malicious activity as opposed to public blockchains, on which validators do not require approval or authorization from official regulators.