The Monetary Authority of Singapore (MAS) conducted the first pilot project on digital assets and decentralized finance. All this under the protection of a large international bank increasingly interested in tokenization.
Tests on the Aave fork
Cryptocurrencies continue to put off the vast majority of the population, whether or not they are educated in the economic system. Bankers are trying to curb the growing popularity of Bitcoin and Ethereum.
Indeed, both the attractiveness of returns and the speed of transactions are factors that disrupt the current system, which is forced to adapt to take a positive attitude.
While cryptocurrencies come with certain risks and limitations, they raise questions about the tokenization of our exchanges. Questions that the Monetary Authority of Singapore is trying to answer.
JPMorgan Chase’s activities in cryptocurrencies are no longer a secret, and the bank has just proved it again on the blockchain with its first transaction on the Aave protocol, despite public statements from its CEO. Specifically, it is a modified version (a fork) of Aave Arc, a platform dedicated to institutional investors.
These operations are performed on Polygon (MATIC) in order to optimize the weighting of the transaction costs induced by the important authentication procedures.
A branch of the Aave Arc code allows banks to configure their settings to suit their needs, especially in terms of interest rates. These early experiments involve the use of tokenized Singapore dollars and Japanese yen.
“By using verifiable credentials to establish identity, we were able to perform a real-time transaction between known attested parties. This is a significant step in the blockchain journey for financial institutions and follows JP Morgan’s many years of work in developing blockchain-based solutions for financial services. says Umar Farooq, CEO of Onyx.
The pilot project, carried out in collaboration with the Monetary Authority of Singapore (MAS), involves the use of a public blockchain that allows everyone to consult on banking operations.
Further proof of the potential of blockchain technology
Project Guardian, launched by MAS, aims to explore the potential of decentralized finance (DeFi) applications in the wholesale or wholesale finance markets. Central banks take a new step.
This first direct transaction was carried out in collaboration with DBS Bank, JPMorgan Chase and SBI Digital Asset Holdings. These are transactions in foreign currency and government bonds for cash pools.
Among this cash are various asset tokens, namely Singapore and Japanese government bonds, as well as Japanese yen and Singapore dollars.
“We are thrilled to be part of this pilot project where Singapore is leading the rethink of the financial market infrastructure with blockchain technology. The success of the test transactions shows a promising application of tokenization and DeFi techniques for the government bond market. says Kwee Juan Han, head of the bank’s strategy and planning group.
Therefore, according to the AGs, this feasibility test highlights the savings and simplification potential of the OTC market. In fact, disintermediation via DeFi in particular means that there are no costs associated with the execution of transactions by clearing and settlement intermediaries.
Further experiments are planned. As a result, the central bank announced two upcoming pilot projects in the area of trade finance and wealth management. When it comes to commercial finance, Standard Chartered leads the pack.
While certain speeches may sometimes suggest otherwise, these concrete actions are yet another sign of the growing interest in blockchain technology.