QUICK TAKE:
Monetary Authority of Singapore (MAS) announced the start of the first industry pilot under MAS’ Project Guardian
It roped in JP Morgan, along with DBS and SBI Digital Asset for the pilot project
MAS granted Circle In-Principle Approval as a Major Payments Institution License holder
MAS also granted a license to Paxos to provide digital payment token services
On November 2, the Monetary Authority of Singapore (MAS) announced the successful start of the first crypto industry pilot. Further, the pilot was announced under MAS’ Project Guardian. Notably, Project Guardian explores the potential of DeFi for financial institutions.
Furthermore, the first pilot for foreign exchange trades and government bond trades was carried out by JP Morgan, DBS, and SBI Digital Assets. It was done by utilizing the modified public lending protocol Aave and the decentralized exchange Uniswap on the Polygon blockchain. One test involved foreign exchange, while the other involved trading government bonds.
WORLD! J.P. Morgan has executed its 1st *LIVE* trade on public blockchain using DeFi, Tokenized Deposits & Verifiable Credentials, part of @MAS_sg Project Guardian 🙌🚀🔥https://t.co/XI212SG4zg Many world 1sts here, & since this is public ⛓ here’s a transparent🧵on what we did:
— Ty Lobban (@TyLobban) November 2, 2022
JP Morgan Trades on Public Blockchain
It is worth noting that Aave Arc, which is Aave’s support for permissioned DeFi lending pools, was introduced earlier this year. Further, JP Morgan deployed a modified version of Aave Arc. It did so that the members could set certain parameters such as interest rate and fx rates. Moreover, JP Morgan even issued Tokenized Singapore Dollar Deposits. Notably, this is a deposit token which is a general liability of JPM. It’s a native token giving stable on-chain value without the scalability issues of stablecoins.
Furthermore, a tweet by Ty Lobban, who is a developer of web3 products at JP Morgan, said,
…we used @w3c Verifiable Credentials to provide compliant access to @AaveAave (or any other DeFi protocol). VCs give much more fine grained control than just allow-listing addresses. Risk limits, asset limits etc all possible. AND we built *on-chain* verification of VCs!
He added that they have developed this in such a way that VC-based compliance checks can be used with any DeFi protocol without those protocols needing to know anything about the firms. Further, this has removed the need for DeFi front ends to perform KYC checks. Compliance is pushed to the edge rather than the dapp, he said.
MAS Issues License to Circle and Paxos
Furthermore, on the same day, the MAS granted Circle, the issuer of USDC, In-Principle Approval as a Major Payments Institution License holder. It enabled Circle to provide digital payment tokens as well as cross-border and domestic transfer services in Singapore. Circle previously selected Singapore as its primary Asian hub, and it continues to hire in the city-state to service its expanding regional operations.
Circle, the issuer of USDC, has received In-Principle Approval as a Major Payments Institution License holder from Monetary Authority of Singapore (MAS). It allows Circle to offer digital payment token products, cross-border and domestic transfer services. https://t.co/LgZaxl51lE
— Wu Blockchain (@WuBlockchain) November 2, 2022
Moreover, Paxos, the leading regulated blockchain infrastructure platform, also said today that it was granted a license by the MAS. The announcement for the same was made at the Singapore Fintech Festival. Notably, the license has been granted to provide digital payment token services under the Payment Services Act 2019.