Singapore regulator MAS to explore the DeFi space; Details

Sahana Kiran
Source – Pixabay

The crypto-verse was started to uphold decentralization. However, things did not seem to go as planned and DeFi emerged. A space that solely focused on all things decentralization. This side of the crypto industry attained immense traction over the years and went on to garner the attention of mainstream firms as well. Now, governments seemed to be taking a keen look into it. Singapore’s financial watchdog has its eyes on decentralized finance, but it’s not regulatory.

The Monetary Authority of Singapore [MAS] has reportedly partnered up with JPMorgan, DBS as well as Marketnode. This collaboration was made to veer into the DeFi space. The project that these behemoths would be working on is called Project Guardian and would be rolled out by the Deputy Prime Minister, Heng Swee Keat.

This imminent project would explore the feasibility of applications in tokenization as well as DeFi. The team is expected to manage the risks that surround financial stability and integrity.

The government intends to investigate and formulate four prominent use cases in its upcoming pilot. The first one would focus on looking into the use of public blockchains to further assemble interoperable, open networks. Trading of digital assets across different liquidity pools, as well as platforms, would also be enabled.

The second one would focus on creating a trusted environment for the execution of DeFi protocols. Elaborating on the third announcement further read,

“Examine the representation of securities in the form of digital bearer assets and the use of tokenized deposits issued by deposit-taking institutions on public blockchains. The project aims to build upon existing token standards, incorporate trust anchor credentials and enable asset-backed tokens to be interoperable with other digital assets used in DeFi protocols on the open networks.”

‘Institutional grade DeFi protocols’

To protect against market manipulation and operational risk, the project would also investigate incorporating regulatory protections and controls into DeFi protocols. The study will also look at how smart contract auditing skills may be used to find code flaws.

This initiative has the potential to boost the use of DeFi technology. Despite this, some people claimed that government participation was robbing the space of its decentralized nature.