Financial regulatory authorities from the United Kingdom, Singapore, Switzerland, and Japan have initiated a collaborative effort to explore potential applications of fund and asset tokenization as well as decentralized finance (DeFi).

The Financial Conduct Authority (FCA) has joined forces with the Monetary Authority of Singapore (MAS), Singapore's central bank, the Financial Services Agency of Japan (FSA), and the Swiss Financial Market Supervisory Authority (FINMA) to participate in this venture.

This project represents an expansion of MAS' Project Guardian, which involved cooperation between the central bank and 15 financial institutions to conduct industry trials focused on the tokenization of assets in areas such as fixed income, foreign exchange, and asset management products. While these trials revealed the potential for significant market and transaction efficiencies through tokenization, the project recognizes the need for increased cross-border collaboration among policymakers and regulators to address scalability challenges.

The primary objective of this collaborative effort is to facilitate knowledge sharing and investigate the advantages, regulatory hurdles, and commercial applications associated with asset and fund tokenization.

Leong Sing Chiong, Deputy Managing Director of MAS, emphasized the strong commitment among policymakers to enhance their comprehension of the opportunities and risks stemming from digital asset innovation. Through this partnership, they aspire to encourage the development of standardized regulatory frameworks that can better facilitate cross-border interoperability and sustainable growth within the digital asset ecosystem.