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April 2024
AAM Magazine
April 2024
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Singapore central bank works with financial institutions to aid tokenisation

By Goh Thean Eu   
April 2, 2024

Singapore’s central bank is working with financial institutions to grow the tokenisation industry to tap into the potential for tokenised funds.

Chia Der Jiun, managing director of the Monetary Authority of Singapore (MAS), cited a survey by UK financial technology firm Calastone in 2023 which found that 95% of Asia Pacific respondents were exploring or implementing tokenisation projects, and 61% expected tokenised offerings to hit the market within 12 months.

Speaking at an investment conference in Singapore on March 27, he listed a couple of tokenisation pilot projects that are ongoing in the city state.

One is by Switzerland’s UBS Asset Management, which is piloting the digital native issuance of Variable Capital Company or VCC funds to simplify the fund issuance process. This will also streamline distribution and secondary market trading of fund shares by eliminating intermediaries and traditional administrative steps.

Another pilot project is by UK asset manager Schroders and Calastone, which are tokenising a VCC fund and recording the ownership of fund shares on a shared ledger, which will enable instant settlement.

“To support fund tokenisation pilots as they move towards the commercial phase, MAS is working with these pilot managers on the legal and regulatory treatment and implications of tokenised investment funds. This also gives us an opportunity to review our regulatory framework so that it remains relevant to transformative new market practices,” Chia said in his keynote address at the conference.

MAS is also working with a group of financial institutions to develop a foundational digital infrastructure.

“This objective is to enable tokenised assets to be transacted across networks and across countries efficiently and seamlessly,” Chia said.