Singapore has continued to introduce new cryptocurrency-related regulations. The state has recently announced the pilot phase for Central Bank Digital Currencies (CBDCs). The CBDC project is directed towards wholesale transactions taking place between various banking enterprises.
This is a big leap from previous test versions where the CBDC pilot took place in a simulated environment. The Monetary Authority of Singapore (MAS) has been working on a CBDC project since the start of 2016.
Under the leadership of Managing Director Ravi Menon, the government has published the Orchid Blueprint. This document contains details regarding the issuance of wholesale CBDC for managing transactions between commercial banking firms.
On this account, MAS issued a statement on Thursday to employ the same technology for processing international securities transactions. The document outlines the framework for infrastructure specifications for the pilot phase. One of the provisions included an extension of trials for tokenized bank liabilities and supervised stablecoins.
Authorities Issue Comprehensive Regulations Regarding CBDC Testing
Regulators in Singapore have mentioned a settlement ledger in the document. According to the regulatory guidelines, this ledger will have the ability to track all transactions on the blockchain and can conduct programmability and atomic settlement of digital currencies.
This is done by allocating a name service to ensure user-friendly wallet addresses and titles. In this manner, the utility of digital currency systems will increase.
At the same time, the document also talks about the issuance of a new feature in the form of programmability protocol. The project will focus on purpose-bound money or PBM. In this manner, it is able to set a specific parameter for digital currency exchanges.
PBM is a predefined criterion for settlement and automated transactions. It will showcase the advanced capabilities of CBDC tokens. In addition to CBDCs, the regulators in Singapore have also issued regulatory guidelines for stablecoins.
Paxos Introduces New Stablecoin Backed by USD
Paxos is a stablecoin issuer that is based in Singapore. The firm recently announced the issuance of a new stablecoin backed by USD. For this project, the firm has acquired approval from financial regulators in the state.
The decision of the regulators to grant a license for a new stablecoin indicates their stance to support innovations in cryptocurrencies. At the same time, MAS has positioned Singapore as the hub for crypto innovations focusing on secure and efficient payment networks.
In this manner, international security transactions, tokenization, and stablecoin highlight the latest innovations that Singapore has introduced.
The foray of the government in advancing digital currencies to initiate a pilot for wholesale CBDCs is a sign of advancement in the digital currency sector. On this account, the nation is on its way to integrate blockchain technology to enable advanced, secure, and efficient payment systems.
On the other hand, MAS is also working on Project Guardian regarding tokenization on public blockchain. On this account, the regulator has initiated the Global Layer One or GL1 protocol. This protocol enables cross-border payments and access international liquidity pools. BNY Mellon, DBS, MUFG, and JP Morgan are collaborating on GL1.
At the same time, MAS is also leveraging Avalanche blockchain for oracles and forex prices with firms Citi, T Rowe, and Fidelity. Ant Group partnered with HSBC for a tokenization trial in Hong Kong. BNY Mellon and OCBC are also working on digitized cross-border FX solutions.