JPMorgan pilot tests Asset Tokenization With Singapore

JPMorgan has joined hands with DBS Bank and Marketnode to launch a pilot project on digital asset tokenisation in Singapore

By Shashank Bhardwaj

Image: Shutterstock

JPMorgan Chase & Co. is piloting the tokenisation of DeFi on the blockchain as part of the Singapore Central Bank's project to investigate the economic potential and value-adding use cases of crypto assets.

The Singapore Monetary Authority announced the launch of an industry-wide collaborative pilot project on Tuesday led by various 'trust anchors'. These trust anchors include Singaporean multinational DBS Bank, the American investment bank JPMorgan Chase & Co., and SGX-Temasek digital asset venture Marketnode.

This project intends to conduct secured borrowing and lending on a public blockchain-based network through the use of smart contracts. The initiative is named 'Project Guardian'.

The Coordinating Minister for Economic Policies Heng Swee Keat and the Deputy Prime Minister of Singapore announced the project at the Asia Tech x Singapore Summit.

The Group Head of Planning and Strategy at DBS, Han Kwee Juan, said, "Developed on [the] public blockchain, this pilot is also pivotal as it furthers efforts to innovate, advance and scale institutional financial applications on blockchain and their interoperability across different blockchain networks with the long-established rails of the existing financial markets."

The Monetary Authority of Singapore (MAS) was among the first regulators to investigate the use of blockchain technology. Singapore established a crypto licensing regime a few years ago. However, crypto players have been frustrated by the slow license granting process. Further, a crypto advertising ban caught the industry off guard. With Project Guardian, Singapore wants to establish its image as a hub for decentralised finance.

Project Guardian aims to develop and pilot use cases in areas such as open, interoperable networks, trust anchors, and institutional-grade DeFi protocols. The project's first pilot will look into potential DeFi applications in wholesale funding markets. It also entails the establishment of a permissioned liquidity pool of tokenised bonds and deposits. The project will further focus on reducing market manipulation by incorporating regulatory safeguards into DeFi protocols.

Tokenisation allows a crypto token to represent a traditional asset such as stock. The MAS pilot appears to work in the same way as the DeFi protocol Aave. Aave also has permissioned liquidity pools and is aimed at the wholesale funding market.

"Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem," quoted the Chief FinTech Officer of MAS, Sopnendu Mohanty.

Mohanty added, "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."

It is noteworthy that DBS Bank, JPMorgan, and Temasek (Marketnode co-owner) are already involved in a separate trial of 'Partior'. It is a Singaporean blockchain-based interbank payment system. The platform aims to increase the speed and lower the cost of cross-border payments, which are expected to reach $156 trillion by the end of 2022.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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