The Financial Conduct Authority (FCA) has joined a policymaker group established by the Monetary Authority of Singapore (MAS) which aims to foster responsible digital asset innovation.

The group, which has also been joined by the central banks of Japan and Switzerland, has been established under MAS’s existing Project Guardian, an initiative which explores fund and asset tokenisation use cases, and decentralised finance.

Under Project Guardian, MAS has already collaborated with 15 financial institutions in carrying out industry pilots on asset tokenisation in fixed income, foreign exchange, and asset management products.

MAS said the pilots to date had demonstrated the potential to reap “significant market and transaction efficiencies from the use of tokenisation” and that the policymaker group had been established due to a “need for closer cross-border collaboration among policymakers and regulators.”

“The UK’s asset management sector – which is the second largest in the world – sees significant potential in the use of distributed ledger technology to drive innovations, efficiencies, and enhanced value for customers,” said Sarah Pritchard, executive director of markets and international at the FCA. “We look forward to working with our global partners to examine the market benefits, regulatory challenges, and industry use cases of asset and fund tokenisation.”

MAS, along with the central banks of France and Switzerland, recently took part in a separate project enacted by the Bank of International Settlements (BIS) in which they successfully tested cross-border wholesale CBDCs.

At the time, Cecilia Skingsley, head of the BIS Innovation Hub said: "It [the project] successfully demonstrated that it is feasible to exchange wholesale CBDC across borders using novel concepts such as automated market makers.”

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