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Policy & Regulation

Singapore’s regulator will research the potential of DeFi

31 May 2022 : 12:45
2 min read
  • The Monetary Authority of Singapore (MAS) announced plans to explore use cases for DeFi
  • The regulator will collaborate with financial institutions in Project Guardian to research the feasibility of DeFi applications
  • It is also looking to investigate the regulatory safeguards and controls of such protocols

On Tuesday, the Monetary Authority of Singapore (MAS) announced plans to explore use cases for decentralized finance (DeFi) in an initiative named “Project Guardian.”

Project Guardian

The Monetary Authority of Singapore unveiled Project Guardian during the Asia Tech x Singapore Summit by Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat. Partners in the initiative include JPMorgan, Marketnote, and DBS, who will work with the regulator to investigate the “economic potential and value-adding use cases of asset tokenization.”

Mr. Han Kwee Juan, DBS head of group planning and strategy, said: “We believe that these early explorations in DeFi solutions will ensure the competitiveness and relevance of Singapore as a cutting-edge financial center.”

During the project, the regulator aims to test the viability of asset tokenization and DeFi applications by creating pilot use cases in four major areas: open, interoperable networks, trust anchors, asset tokenization, and institutional-grade DeFi protocols.

Pilot programs

MAS will do the research on these topics in several pilot programs; the first is creating a permissioned liquidity pool. The pilot, led by DBS Bank, JP Morgan, and Marketnode, a digital markets infrastructure operator, aims to investigate secured borrowing and lending on a public blockchain via smart contracts.

It will also look into collaborating with regulated financial institutions that screen, verify, and issue credentials to entities that want to participate in DeFi protocols and investigate the incorporation of regulatory safeguards and controls of such protocols.

Stan Colenbrander

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