Singapore Plans to Sell Digital Tokens via Blockchain
Henry Tan
Singapore is planning to develop a blockchain-powered platform to sell tokenized securities to improve operational efficiency and lower settlement risks.
In a statement, the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) have formed a collaboration with technology firm Anquan, consulting giant Deloitte, and stock exchange operator Nasdaq to create a Delivery versus Payment (DvP) platform to carry out simultaneously the transaction and final settlement of tokenized digital currencies and securities.
DvP refers to a settlement procedure in which securities and monies are simultaneously traded to ensure that delivery of securities is completed if and only if the corresponding payment is made.
The SGX explained that both parties will exchange money for assets using a smart contract network which shall occur across various blockchain platforms.
To be released in November this year, the report shall outline the potential of automating DvP settlement process with smart contracts and identify major design considerations to ensure improved protection for investors and resilient operations.
The three companies commissioned for the project “will leverage on the open-source software developed and made publicly available in Project Ubin Phase 2.”
“Blockchain technology is radically transforming how financial transactions are performed today, and the ability to transact seamlessly across blockchains will open up a world of new business opportunities. The involvement of three prominent technology partners highlights the commercial interest in making this a reality,” Sopnendu Mohanty, MAS chief fintech officer, said.
Mohanty added they expect a further growth in the crypto space as fintechs leverage on the strong pool of talent and expertise in the country to design innovative blockchain applications and gain from potential opportunities from this technology.
“This initiative will deploy blockchain technology to efficiently link up funds transfer and securities transfer, eliminating both buyers’ and sellers’ risk in the DvP process. This is a collaborative innovation bringing together multiple players to pursue real-world opportunities that will benefit the ecosystem,” Tinku Gupta, SGX technology head, said.
Initiated in November 2016, the two-phased Project Ubin is the government’s ongoing blockchain initiative which aims to use the distributed ledger technology (DLT) for clearing and settlement of payments and securities. Essentially, it recognizes the technology’s potential in making financial transactions and processes more transparent, resilient and affordable.
The first phase attained the goal of producing a digital representation of the Singapore dollar for interbank settlement, testing methods of connecting bank systems to a DLT, and making the MAS Electronic Payment System (MEPS+) interoperate with the technology for automating collateral management.
Conversely, the second phase curated software prototypes of three different models for decentralized inter-bank payment and settlements with decentralized netting of payments in a manner that preserves transactional privacy.
This MAS implied in November last year that this initiative would continue in the future. The central bank had said the succeeding phases would focus on bond payments although no additional information was provided.
“Future phases of Project Ubin could focus on a decentralized bonds payments system, which could be supported by MAS and the participant banks with execution driven by Singapore Exchange. This could deliver a more efficient fixed income securities trading and settlement cycle through DLT,” the report stated at that time.
