MAS's "Project Guardian" welcomes Japan's FSA as an observer.
In a ground-breaking move, the Monetary Authority of Singapore (MAS) is partnering with Japan's Financial Services Authority (FSA) to conduct pilot tests for various cryptocurrency projects.
It is worth noting that the pilot will be conducted following MAS's "Project Guardian" initiative.
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The Project Guardian initiative was launched in May 2022 by the MAS, focusing on exploring the potential of asset tokenization and Decentralized Finance (DeFi) in a regulated setting. With an emphasis on open networks, asset tokenization, institutional-grade DeFi protocols, and trust anchors, the project aims at pioneering change in the financial sector.
In the recent announcement made on June 26, it was revealed that Japan's FSA will participate in this venture, albeit in an observer capacity. The regulators stated:
The project aims to test the feasibility of applications of digital technologies such as asset tokenization through pilot experimentations, while managing risks to financial stability and integrity. Current industry pilots include fixed income, foreign exchange, and asset & wealth management.
The Guardian Project has already made significant strides. One of the noteworthy projects under its belt includes a successful transaction conducted by DBS Bank, JP Morgan, and SBI Digital Asset Holdings.
This transaction involved foreign exchange and government bonds against liquidity pools of tokenized Singapore Government Securities Bonds, Japanese Government Bonds, and the currencies of Japan and Singapore.
Furthermore, a blockchain-structured product pilot has been successfully concluded by HSBC, Marketnode, and UOB.
This is not the first time MAS and FSA are collaborating. The two regulatory bodies established a fintech cooperation framework in 2017 to foster innovation in their respective markets.
This collaboration comes at a time when Japan is embracing more relaxed laws towards cryptocurrencies. Recently, Japan's National Tax Agency ruled to exempt token issuers from a 30% tax on unrealized capital gains.
