MAS Completes First Industry Pilot Program For DeFi


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The Monetary Authority of Singapore (MAS) announced the completion of the first industry pilot program for digital assets and Decentralized Finance (DeFi) under the apex bank’s Project Guardian. During the pilot testing, wholesale transactions which explored the potential of DeFi and digital assets were conducted. 

Additionally, other pilot programs have also been launched, this time around to test the application of asset tokenization and DeFi across a broader range of use cases in the financial sector.

For this testing, MAS engaged financial institutions and investors like DBS Bank, JPMorgan Chase, and SBI Digital Asset Holdings to conduct foreign exchange and government bond transactions against liquidity pools. These liquidity pools included tokenized Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY), and Singapore Dollar (SGD).

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Specifically, a demonstration exercise was conducted to portray buying and selling of tokenized government bonds.

Also, both tokenized Japanese Yen and Singapore Dollar were used in a live cross-border transaction. In this live cross-border transaction, it was discovered that tokenized assets can be traded, cleared, and settled instantaneously among direct participants.

MAS Utilize Polygon And Aave Blockchain

Ty Lobban, the Head of Blockchain Launch & Onyx Digital Assets at JPMorgan Chase confirmed that the test environment was centered around two of the most utilized blockchains in the crypto industry.

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These blockchains are Polygon, a Layer-2 (L2) decentralized protocol on the Ethereum (ETH) network as well as Aave, an open-source liquidity protocol that also doubles as one of the pioneering DeFi lending protocols.

The Singapore central bank took notice of the fact that DeFi was able to complete transactions without a need for financial intermediaries otherwise known as middlemen.

Instead, these transactions were conducted with entities directly while leveraging smart contracts. Eventually, this helped to reduce costs and the time taken to finalize trade settlement compared to when there were intermediaries. 

Project Guardian started about seven months ago and since its announcement, MAS has plunged into different collaborations to explore several avenues like studying regulatory and risk management implications as well as developing technological standards. Invariably, MAS is establishing and retaining its presence in the crypto industry especially, with tougher crypto measures.

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