The city-state’s top financial regulator, the Monetary Authority of Singapore (MAS), has reportedly launched “Project Guardian” in partnership with the financial industry. The initiative aims to investigate potential use cases for asset tokenization and decentralized finance (DeFi), and will guide the country’s efforts to become a cryptocurrency hub.
Singapore strengthens its crypto presence
According to a recent report by Bloomberg, the first phase of the upcoming project will explore the use of DeFi in wholesale funding markets. The effort will be led by DBS Bank, Singapore’s largest bank, JPMorgan Chase, a U.S. multinational financial institution, and crypto venture capital firm Marketnode.
“Project Guardian” will also aim to ensure that the DeFi world does not compromise the country’s financial stability. Speaking on the matter, Sopnendu Mohanty, Chief Fintech Officer, Monetary Authority of Singapore:
“Through practical experimentation with the financial industry and the wider ecosystem, we seek to deepen our understanding of this rapidly transforming digital asset ecosystem. The experience of Project Guardian will help inform policy markets on the benefits of leveraging DeFi. required regulatory barriers while reducing its risk.”
Another important goal of the collaboration is to stop the flow of crypto talent and blockchain business to other destinations. Nearly two months ago, digital asset platform Bybit moved its global headquarters from Singapore to Dubai. Soon after, the hedge fund manager – Three Arrows Capital – revealed similar intentions.
Like Dubai (which recently opened up to the blockchain space), Singapore is willing to establish itself as a cryptocurrency hub, allowing the local digital asset ecosystem to flourish.
Strict rules can be beneficial
As a highly developed economy with a tech-savvy population, it is no surprise that many Singaporeans are interested in the cryptocurrency market. Last year’s independent protected area study estimated that 43 percent of local people had entered the ecosystem. Public awareness of cryptocurrencies was also high, as 93% of participants said they knew about Bitcoin.
Unsurprisingly, MAS head Ravi Menon assured that the regulator has no plans to ban the asset class, instead it will apply a comprehensive regulatory framework to it.
Earlier this year, Menon was concerned that criminals could use cryptocurrencies in criminal activities. Therefore, the rules imposed on it should be as “strict” as possible. According to him, the legislation will not only limit illegal activities, but will also reshape Singapore as a global digital asset hub.
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