Singapore Starts DeFi Wholesale Markets with Polygon and Aave

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The Monetary Authority of Singapore (MAS) completed a cross-currency transaction involving tokenized Japanese yen and Singapore dollar deposits as part of a pilot study into the potential of DeFi applications in wholesale finance markets.

According to Ty Lobban of JPMorgan, the global investment firm used Polygon first to choose Ethereum because of its low fees, which were required to reduce operating expenses associated with verification.

It then installed a customized version of Aave Arc to deploy specified parameters, leveraging Aave’s permissioned pool concept.

MAS, JPMorgan, DBS Bank to Use Liquidity Pools

According to MAS, JPMorgan, DBS Bank, and SBI Digital Asset Holdings conducted foreign currency and treasury bond transactions with liquidity pools comprised of Singapore dollars, tokenized yen, and Singapore Treasury Securities Bonds.

Standard Chartered (STAN) is leading the first pilot, which will investigate the use of tokens in financial transactions, as well as another that will test the tokenization of wealth management services.

The wealth management experiment includes HSBC (HSBC), UOB, and Marketnode, a platform for digital assets developed by the Singapore Exchange (SGX) and Temasek.

According to MAS Chief Fintech Officer Sopnendu Mohanty, market participants’ ongoing experiments show that, with the proper safety barriers in place, digital assets and decentralized finance have the potential to change capital markets.

Collaboration of DBS and OGP

MAS follows a report on Monday stating that DBS and Open Government Products, a technology team within the Singaporean government, are collaborating to establish a live trial for the issuing of purpose-bound money-based vouchers using tokenized Singapore dollars on a blockchain.

Han Kwee Juan, DBS’s group head of planning and strategy, discussed how the banks use DeFi to conduct traditional financial transactions in an interview.

Han stated that the company intended to demonstrate that tokenizing cash and government securities within a DeFi liquidity pool was feasible.

The company also desired to create an organizational DeFi environment in which regulators would feel at ease using an AMM and accounting for it with pricing oracles and market information streaming services.


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