The Monetary Authority of Singapore (MAS), Singapore’s central bank, will test DeFi solutions in the area of financing non-retail customers. The initiative has been named ‘Project Guardian’. It will test the feasibility of applications in digital asset tokenisation and DeFi while managing risks to financial stability and integrity. Representatives of the financial market will collaborate with the authority during project implementation. According to the authority’s website, MAS will conduct tests for four areas:

a) open, interoperable networks, i.e. the use of public blockchains to build open, interoperable networks that enable digital assets to be traded across platforms and liquidity pools,

b) trust anchors, i.e. financial institutions tasked with ensuring the security of business transactions by verifying and screening parties that wish to participate in DeFi protocols,

c) asset tokenisation – creation of digital bearer securities and the use of tokenised deposits issued by deposit-taking institutions on public blockchains, using existing token standards; incorporating trust anchor credentials and enabling asset-backed tokens to be interoperable with other digital assets used in DeFi protocols on the open networks,

d) institutional grade DeFi protocols – meaning the introduction of regulatory safeguards and controls into DeFi protocols to mitigate against market manipulation and operational risk.

The first phase of the pilot will see the testing of permissioned liquidity pools in the tokenisation of bonds and deposits, in the process of borrowing and lending through execution of smart contracts on a public blockchain-based network.

More information can be found on the MAS website: https://www.mas.gov.sg/news/media-releases/2022/mas-partners-the-industry-to-pilot-use-cases-in-digital-assets.