According to Ravi Menon, managing director of Singapore’s central bank, the Monetary, the country still aspires to be a hub for digital assets but not for trading cryptocurrencies.
Menon said If a crypto hub is about experimenting with programmable money, using digital assets for use cases, or tokenizing financial assets to increase efficiency and reduce risk in financial transactions, yes, they want to be a crypto hub.
A financial asset is tokenized by converting ownership rights into electronic tokens.
Singapore’s first live digital money trial, which offers companies the power to plan and manage their distribution and use, is being used by DBS Bank to try out government vouchers.
But that is not the kind of cryptocurrency hub they want to be, said Menon, if it involves trading and speculation in cryptocurrencies.
Singapore has hopes to become a global hub for cryptocurrencies, even though it has been cracking down on the industry after several small investors lost their whole life savings to crypto trading. The city-state has repeatedly warned that cryptocurrency trading is extremely risky and unsuitable for the general public due to its volatile and speculative nature. In January 2021, it even prohibited cryptocurrency advertising in public spaces and on social media. More recently, in response to Terra’s Luna’s $60 billion collapse, it suggested new regulations to safeguard retail investors.
However, Singapore has initiated several projects and openly stated its support for blockchain technology. One of them is Project Ubin, which successfully finished its blockchain experiment for the clearing and settlement of payments and securities.
Another is Project Guardian, which just completed its first industry pilot and included tokenized foreign exchange and government bond transactions with DBS Bank, JPMorgan, and SBI Digital Assets Holdings.
The first trial of Project Guardian has shown the ability to lower trading risk, according to Menon.
These initiatives work to reduce the costs of efficient issuance and service, encourage accessibility and transparency, and boost productivity along the value chains of the products. Project Guardian, in Menon’s opinion, can help pave the road for Singapore’s financial markets to advance to the following level.
Two more industry pilots will be carried out by MAS; the first will be led by Standard Chartered Bank and study the feasibility of issuing tokens linked to trade finance assets; the second will involve HSBC, UOB, and Marketnode and allow the native digital issuance of wealth management products.
The MAS will launch Project Ubin+, a global initiative on the cross-border exchange and settlement of foreign currency transactions using wholesale central bank digital currencies, Menon also stated in his speech.
Project Ubin began in 2016 and serves as the foundation for the development of Partior, a blockchain-based payments clearing and settlement network developed by DBS Bank, JPMorgan, and Temasek.
