The United Kingdom’s Financial Conduct Authority (FCA) announced this week that it was partnering with the Monetary Authority of Singapore (MAS) in its ongoing Project Guardian initiative. This coincided with news that regulators from the Japanese Financial Services Agency (FSA) and Switzerland’s Financial Market Supervisory Authority (FINMA) were also partnering on the scheme.
Project Guardian is, according to the MAS website, “a collaborative initiative with the financial industry that seeks to test the feasibility of applications in asset tokenisation and DeFi while managing risks to financial stability and integrity.”
It was first announced in May 2022 and has so far collaborated with numerous financial institutions on various pilot schemes, to demonstrate the potential market and transactional efficiencies of blockchain technology and asset tokenization.
We Observed one of these pilot schemes just last month, as Swiss banking giant UBS launched a tokenized investment fund as a Variable Capital Company; a flexible and tax-efficient Singaporean legal structure for investment funds introduced in 2020.
According to the MAS, the increasing scale and sophistication of these pilot projects has necessitated “closer cross-border collaboration among policymakers and regulators,” hence the invitation for the FCA, FSA and FINMA to become part of the policymaker group.
The stated aims of the newly expanded policymaker group include: advancing discussion on the treatment of digital assets with regard to legal, policy and accounting concerns, potential gaps in existing legislation pertaining to tokenized solutions, common standards and best practise for digital asset network design, interoperability, and knowledge sharing.
Deputy MD of the MAS in Markets and Development, Leong Sing Chiong, said that the new partnership…
“shows a strong desire among policymakers to deepen our understanding of the opportunities and risks arising from digital asset innovation. Through this partnership, we hope to promote the development of common standards and regulatory frameworks that can better support cross border interoperability, as well as sustainable growth of the digital asset ecosystem.”
According to the most recent proposals from the U.K. Treasury, the FCA will soon also be in charge of regulating stablecoins issued within or from the country, for use in payment chains, issuance and custody services.
Meanwhile, Singapore has long held a strong desire to become a leading crypto hub, which has manifested in clear and crypto-friendly policies, in turn encouraging many crypto businesses to set up regional offices in the territory.