Key takeaways:
- The MAS and the FSA established a collaboration for the combined regulation and pilot testing of cryptocurrency projects.
- Project Guardian will interact with policymakers to investigate use cases involving various asset classes.
The Monetary Authority of Singapore (MAS) and the Financial Services Authority (FSA) of Japan established a collaboration for the combined regulation and pilot testing of cryptocurrency projects in accordance with the latter’s “Project Guardian” program on June 26. Participation in the FSA at this phase will be restricted to observers only. The announcement said:
“The project aims to test the feasibility of applications of digital technologies such as asset tokenization through pilot experimentations, while managing risks to financial stability and integrity. Current industry pilots include fixed income, foreign exchange, and asset & wealth management.”
By testing the “feasibility of applications in asset tokenization and DeFi,” Project Guardian was established by the MAS in May 2022. The project focuses on four areas: trust anchors, asset tokenization, open and interoperable networks, and institutional-grade DeFi protocols.
According to the announcement, Project Guardian will interact with policymakers to investigate use cases involving various asset classes in order to advance knowledge in digital asset networks. Deputy Managing Director for MAS Leong Sing Chiong said:
“We welcome FSA’s participation in Project Guardian. We look forward to greater public-private collaboration with FSA to support global efforts in developing a responsible and innovative digital asset ecosystem.”
In the meantime, a pilot test of a blockchain-structured product has been completed by HSBC, Marketnode, UOB, and UBS is looking at the possibility of issuing Variable Capital Company funds on digital asset networks. Project Guardian isn’t the first time the FSA and MAS have worked together. To encourage innovation in their respective industries, the two regulators developed a cooperative fintech cooperation framework in 2017.
The collaboration comes after a time when Japan’s crypto rules were relaxed. The National Tax Agency of Japan decided on June 25 to exempt token issuers from paying a 30% tax on unrealized capital gains. Fumio Kishida, the prime minister of Japan, stated earlier this year that nonfungible tokens and decentralized autonomous organizations might complement the government’s “Cool Japan” plan as it investigates Web3 usage.
The Hong Kong Monetary Authority (HKMA) and the Central Bank of the United Arab Emirates (CBUAE) first announced their partnership in May. The two have now decided to expand it to include “virtual asset regulations and developments.” In addition, the two central banks committed to advancing conversations with each region’s innovation hubs about joint fintech development projects and “knowledge-sharing efforts.”
