Japan's Financial Services Authority (FSA) and the Monetary Authority of Singapore (MAS) have announced a partnership for joint supervision and pilot testing of cryptocurrency projects as part of MAS's "Project Guardian" initiative. The FSA will initially participate as an observer. The objective of the project is to explore the feasibility of digital technology applications, such as asset tokenization, while ensuring financial stability and integrity. Pilot tests currently focus on areas like fixed income, foreign exchange, and asset and wealth management.
MAS launched Project Guardian in May 2022 to assess the viability of asset tokenization and decentralized finance (DeFi) applications within a regulatory framework. The initiative concentrates on open and interoperable networks, trust anchors, asset tokenization, and institutional-grade DeFi Fi protocols. Notable projects under this initiative include FX and government bond trading involving DBS, JP Morgan, and SBI Digital Asset Holdings, utilizing a liquidity pool consisting of tokenized Singaporean and Japanese government bonds, as well as Japanese yen and Singapore dollar.
In the realm of blockchain-structured products, HSBC, Marketnode, and UOB have completed pilot testing, while UBS is exploring the issuance of variable capital corporate funds on the digital asset network. This collaboration builds upon the previous fintech cooperation framework establish ed by the FSA and MAS in 2017 to foster innovation in their respective markets.
The partnership between the FSA and MAS follows a period of relaxation in Japanese cryptocurrency regulations. In a recent ruling, Japan's National Tax Agency exempted token issuers from a 30% tax on unrealized capital gains. Japanese Prime Minister Fumio Kishida has also expressed support for decentralized Autonomous organizations and non-fungible tokens, seeing their potential in advancing the government's "Cool Japan" strategy and exploring Web3 applications.
