Global: Singapore to Bolster Asset Tokenization Amid Rising Demand

The Monetary Authority of Singapore (MAS) has announced plans to advance asset tokenization within the financial services sector, responding to increasing interest in the tokenization of assets like fixed income, foreign exchange (FX), and asset management. This initiative aims to deepen the liquidity of tokenized assets through the development of commercial networks, as detailed in a press release on Monday (Nov. 4).

“MAS has witnessed significant demand for asset tokenization over recent years,” said Leong Sing Chiong, MAS’s Deputy Managing Director for Markets and Development. “We are pleased with the strong engagement from financial institutions and policymakers in co-creating industry standards and risk management frameworks that support the commercial deployment and scaling of tokenized capital markets products industry-wide.”

In line with this push, MAS’s industry initiative, Project Guardian—a consortium of 40 cryptocurrency and blockchain participants—has released two frameworks designed to guide financial institutions in the adoption and safe management of tokenized assets.

The Guardian Fixed Income Framework sets guidelines for tokenization in debt markets, while the Guardian Funds Framework offers best practices for the tokenization of funds, focusing on the creation and management of tokenized multi-asset investment vehicles.

Globally, institutions are cautiously optimistic about the potential of tokenization, though risks remain. In October, the Bank for International Settlements (BIS) underscored that while tokenization could enhance the financial system’s efficiency and security, it also introduces distinct risks.

“As with traditional payment, clearing, and settlement systems, token arrangements could contribute to financial stability and efficiency but will require rigorous governance and risk management,” stated Fabio Panetta, Governor of the Bank of Italy and Chair of the BIS Committee on Payment and Market Infrastructures (CPMI). Panetta noted that risks inherent to existing systems may manifest differently with tokenized structures, given their impact on market architecture.

Tokenization—the process of digitally representing traditional assets on programmable platforms—demands particular attention to governance, legal clarity, custody arrangements, and credit and liquidity risk management to ensure secure and resilient adoption across the financial ecosystem.