The Monetary Authority of Singapore (MAS) and the Bank of International Settlements (BIS) have released a report called ‘Project Guardian: Enabling Open & Interoperable Networks’ that explores the potential of asset tokenization and decentralized finance (DeFi) within international standards and institutional market infrastructure. The report emphasizes the importance of open and interoperable private networks that enable the exchange of tokenized assets using DeFi protocols. It also highlights the risks associated with public networks, including the lack of regulatory approval and the potential for malicious activity. The report suggests that private networks, which only allow pre-approved organizations to participate, offer a more controlled environment with reduced potential for fraud. However, it acknowledges the complexities in regulating DeFi protocols, including the legal and regulatory landscape for tokenized financial assets. The report concludes that a coordinated international approach is needed to address these complexities. The report also mentions several successful trials of digital asset networks by commercial banks, demonstrating the potential benefits of tokenization in terms of customization, distribution, and cost reduction.
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