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FCA joins global digital asset policymaker group

Key Points:

  • The Financial Conduct Authority (FCA) has joined a policymaker group led by the Monetary Authority of Singapore (MAS) to promote responsible digital asset innovation.
  • The group includes the central banks of Japan and Switzerland and is established under MAS’s Project Guardian, focusing on fund and asset tokenisation and decentralized finance.
  • MAS collaborated with 15 financial institutions for industry pilots on asset tokenisation in fixed income, forex, and asset management under Project Guardian.
  • Results showed potential for significant market and transaction efficiencies through tokenisation, leading to the establishment of the policymaker group for closer cross-border collaboration.
  • The UK’s FCA, recognizing the potential in distributed ledger technology, aims to work with global partners to explore market benefits, regulatory challenges, and industry use cases for asset and fund tokenisation.

The Financial Conduct Authority (FCA) has become a member of a policymaker group initiated by the Monetary Authority of Singapore (MAS) to encourage responsible innovation in digital assets.

This group, which includes the central banks of Japan and Switzerland, is formed under MAS’s existing Project Guardian. Project Guardian focuses on exploring use cases for fund and asset tokenisation, as well as decentralized finance. As part of Project Guardian, MAS has collaborated with 15 financial institutions to conduct industry pilots on asset tokenisation in various sectors, including fixed income, foreign exchange, and asset management.

MAS reported that the pilots conducted so far have showcased the potential for “significant market and transaction efficiencies” through tokenisation. The establishment of the policymaker group is a response to the perceived need for increased cross-border collaboration among regulators and policymakers. Sarah Pritchard, Executive Director of Markets and International at the FCA, highlighted the substantial potential in the UK’s asset management sector, the second-largest globally, for leveraging distributed ledger technology to introduce innovations, efficiencies, and added value for customers. She expressed anticipation for collaborative efforts with global partners to explore the benefits, regulatory challenges, and industry use cases of asset and fund tokenisation.

In a separate initiative led by the Bank of International Settlements (BIS), MAS, along with the central banks of France and Switzerland, participated in the successful testing of cross-border wholesale Central Bank Digital Currencies (CBDCs). Cecilia Skingsley, Head of the BIS Innovation Hub, remarked on the project’s success in demonstrating the feasibility of exchanging wholesale CBDCs across borders, incorporating innovative concepts such as automated market makers.

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