31 May Singapore Looks Deeper Into DeFi, Launches Crypto Initiative
The top financial regulator of the city-state – the Monetary Authority of Singapore (MAS) – reportedly partnered with the finance industry to introduce “Project Guardian.” The initiative aims to investigate potential use-cases of asset tokenization and decentralized finance (DeFi) and will guide the nation’s efforts to become a cryptocurrency hub.
Singapore to Strengthen its Crypto Presence
According to recent coverage by Bloomberg, the first phase of the upcoming project will explore DeFi applications in wholesale funding markets. The effort will be led by Singapore’s largest bank – DBS Bank, the American multinational financial institution – JPMorgan Chase, and the crypto venture Marketnode.
“Project Guardian” will also aim to ensure that the DeFi universe will not harm the country’s financial stability. Speaking on the matter was Sopnendu Mohanty – Chief Fintech Officer at the MAS:
“Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem. The learnings from “Project Guardian” will serve to inform policy markets on the regulatory guardrails that are needed to harness the benefits of DeFi, while mitigating its risks.”
Another vital goal of the collaboration is to stop the drainage of crypto talents and blockchain businesses to other destinations. Nearly two months ago, the digital asset platform Bybit relocated its global headquarters from Singapore to Dubai. Shortly after, the hedge fund manager – Three Arrows Capital – revealed similar intentions.
Like Dubai (which has recently opened its arms to the blockchain sector), Singapore is willing to establish itself as a cryptocurrency center and let the local digital asset ecosystem thrive.
Strict Rules Could be Beneficial
Being a highly developed economy with a tech-savvy population, it comes as no surprise that many Singaporeans are interested in the cryptocurrency market. Last year’s Independent Reserve study estimated that 43% of the locals had entered the ecosystem. Mass awareness of crypto is also at high levels, as 93% of the participants said they knew of bitcoin.
Unsurprisingly, Ravi Menon – the head of the MAS – assured that the regulator has no plans to prohibit the asset class, but instead, it would apply a comprehensive regulatory framework to it.
Earlier this year, Menon raised concerns that wrongdoers could employ crypto in criminal activities. As such, the rules imposed on it should be as “stringent” as possible. According to him, the legislation will not only restrict illicit actions but also reshape Singapore as a global digital asset hub.
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