of Monetary Authority of Singapore (MAS)has successfully completed the first phase of its Global Layer 1 (GL1) initiative together with international financial institutions.
Regulators are now focused on developing standards, market practices, and governance principles for the digital infrastructure that supports tokenized assets.
The MAS Global Layer 1 initiative involves partnerships with global industry associations and financial institutions aimed at developing common standards in fixed income, foreign exchange (FX), and asset and wealth management.
GL1 Reference Model
Over the past two years, MAS has been working with 24 financial institutions to pilot asset tokenization use cases under Project Guardian.
These institutions include asset managers, market operators, custodians, credit rating agencies, commercial banks, etc.
To further these efforts, MAS is pleased to welcome the Global Financial Markets Association (GFMA), the International Capital Markets Association (ICMA) and the International Swaps and Derivatives Association (ISDA) as the first global industry associations to join the Project Guardian industry group.
Recently, S&P Global Ratings announced its participation in Project Guardian, where the company will contribute to the fixed income workstream by developing analytical frameworks and benchmarks in digital assets and tokenized markets.
Additionally, Alta Exchange, Hamilton Lane and Phillip Securities have partnered on a tokenized private credit fund. Project Guardian.
MAS’s Global Layer 1 initiative aims to expand access to private credit and increase liquidity through the introduction of a Shariah-compliant tokenized private credit fund.
Building on the success of these pilots, MAS will establish three workstreams to develop standards and frameworks across major asset classes.
The Fixed Income Workstream will work with ICMA to develop protocols and data specifications, and partner with GFMA to develop standard clauses for smart contracts for fixed income products.
The FX workstream will work with ISDA and GFMA’s Global Foreign Exchange Division (GFXD) and will focus on FX data specifications, risk management frameworks and documentation.
The Asset and Asset Management workstream will engage with custodians and asset managers globally on common data models and risk considerations for fund tokenization.
To scale tokenized asset trading globally, a shared ledger infrastructure is needed that can accommodate a wide range of tokenized financial assets while meeting regulatory requirements.
Under the GL1 initiative, MAS is working with international policymakers and financial institutions, including BNY, Citi, JP Morgan, MUFG Bank and Societe Generale-FORGE, to consider the business, governance, risk, legal and technical aspects of a shared ledger infrastructure.
Policymakers at the European Central Bank, the Bank of France and the International Monetary Fund are also closely monitoring the GL1 initiative.
a White Paper A document has been published detailing GL1’s design principles, objectives and potential uses.
Examples of where GL1 is used
Going forward, GL1 plans to expand its collaboration with more policymakers, central banks, regulators, international standard-setting bodies and financial institutions.
The next phase will include establishing a non-profit organization (GL1 Org) to develop principles, policies and standards for operating the Global Shared Ledger Infrastructure, as well as exploring the creation of a potentially independent operating company to build and deploy the GL1 infrastructure.
Leon Sin Cheong
Mr Leong Sin Cheong, MAS deputy managing director (markets and development) said:
“Project Guardian provides a useful platform for central banks, regulators and financial institutions to understand the opportunities and risks of asset tokenization while operating in a safe environment.
“The GL1 Initiative is an important next step in realizing the potential of asset tokenization and increasing capital market efficiency. Public-private partnerships such as this are essential to ensure that financial infrastructure continues to serve the needs of market participants and consumers while maintaining market integrity and financial stability.”
