The Monetary Authority of Singapore (NAS) has big plans for decentralized finance. Together with JPMorgan, DBS Bank, and Marketnode, the organization will use digital assets for tokenization and DeFi. The effort occurs under the Project Guardian banner and consists of various pilot tests.
MAS Wants To Experiment With DeFi
The tune by banks and authorities regarding cryptocurrency has taken a substantial turn in recent years. Whereas these entities would shun the industry at every turn, they now openly experiment with new technologies. The MAS is the latest entity to do so and set up a streamlined effort with various finance players. Through Project Guardian, they will conduct pilot tests in four key areas to evaluate applications spanning blockchain, trust anchors, tokenization, and institutional-grade DeFi.
MAS Chief Fintech Officer Sopnendu Mohanty comments:
“Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem. The learnings from Project Guardian will serve to inform policy markets on the regulatory guardrails that are needed to harness the benefits of DeFi, while mitigating its risks.”
Funding markets are the primary area of exploration for this new MAS initiative. DBS Bank will lead the tests and collaborate with JPMorgan and Marketnode. The objective is to create a permissioned liquidity pool of tokenized deposits and bonds. In addition, through DeFi technology, the pilot will explore secured borrowing and lending on a public blockchain network. It is unclear which network this will be, though.
Marketnode CEO Martin Pickrodt concludes:
“Through Project Guardian, we aim to address real market issues, such as fragmented liquidity venues, high intermediation costs and transaction inefficiencies, and are looking forward to the journey ahead.”