In this week’s roundup, we look at Singapore’s financial watchdog looking to develop asset tokenisation standards across various asset classes, Cega’s new shark fin products, and more.

The Monetary Authority of Singapore (MAS) has expanded initiatives to scale asset tokenisation for financial services as it looks to develop asset tokenisation standards across various segments, including fixed income, FX, and asset and wealth management.

The GL1 initiative is an important next step to realise the potential of asset tokenisation and reap efficiencies in capital markets - Sing Chiong Leong, MAS

In an announcement revealed on 27 June, Singapore’s financial watchdog introduced several global industry associations to join Project Guardian’s industry group, consisting of Global Financial Markets Association (GFMA), International Capital Market Association (ICMA), and the International Swaps and Derivatives Association (ISDA).

Launched in May 2022, the MAS’ Project Guardian has seen 24 financial institutions pilot asset tokenisation use cases – for instance, SBI Digital Markets’ collaborated with UBS Asset Management on a technical pilot for the issuance and distribution of a tokenised variable capital company fund in October 2023. In November 2022, HSBC and United Overseas Bank patented on testing the digital issuance of wealth management products via distributed ledger technology.

With the latest scaling, the financial watchdog will set up the fixed income workstream and work with ICMA to develop protocols and data specifications based on ICMA’s Bond Data Taxonomy. The workstream will also consider the types of risk factors and disclosures required in a tokenised bond offering document. 

FX workstream, in partnership with ISDA and the Global Foreign Exchange Division of the GFMA, will develop FX data specifications, risk management frameworks, and FX documentation. For the asset and wealth management workstream, it will deepen collaboration with global custodians and asset managers, focus on common data models, and model risk considerations specific to fund tokenisation.

Meanwhile, the MAS also said it has completed the first phase of the Global Layer One (GL1) initiative, which was initially announced last November and aimed to push the development of shared ledger infrastructure based on distributed ledger technology enabling cross-border transactions and global liquidity pools.

Under the GL1 initiative, the MAS is collaborating with financial instructions including BNY, Citi, J.P. Morgan, MUFG Bank, Ltd., and Societe Generale-FORGE, as well as policymakers like European Central Bank, Banque de France and the International Monetary Fund.

In the next phase, GL1 would explore the establishment of a non-profit organisation, GL1 Org, to develop principles, policies and standards for operating a global shared ledger infrastructure.

‘The GL1 initiative is an important next step to realise the potential of asset tokenisation and reap efficiencies in capital markets,’ said Sing Chiong Leong (right), deputy managing director of markets and development at MAS.

‘Such public-private partnerships are fundamental to ensure financial infrastructures continue to serve the needs of market participants and consumers, while maintaining market integrity and financial stability,’ he added.

Cega unveils DeFi shark fin products

Cega, a decentralised finance (DeFi) protocol that focuses on on-chain structured investment products, has added a suite of shark fin products to its crypto structured products range.

There are two types comprised in its shark fin suite: a bull shark note denominated in Bitcoin and a bull shark fin note denominated in Ethereum’s native cryptocurrency Ether. Both provide participation in price increases with capital protection and are 100% principal protected with lending and options components.

The debut of shark fin products is responding to the need to ‘address a gap in the market for conservative investors and DeFi lenders who want to outperform existing lending rates while protecting their principal and maintaining a delta-neutral profile,’ stated Cega, led by CEO and co-founder Arisa Toyosaki (right).

The latest product launch came after the DeFi protocol collaborated with the Ethereum blockchain-based liquid staking protocol Lido last December to launch a dual currency strategy that allows investors to capture opportunities in the liquid staking ecosystem.

The dual currency play also followed the protocol expansion step to the Layer 2 network Arbitrum last year. In March 2022, it announced it raised US$4.3m to scale the protocol as it develops a new range of exotic derivatives.

HashKey Capital joins as founding member of SOFA.org

Digital asset manager HashKey Capital has become a founding member of SOFA.org, which was founded just this month as an open-source and non-profit decentralised autonomous organization (DAO) focused on developing blockchain-based settlements of financial assets.

SOFA.org's first project aims to offer a request-for-quote (RFQ)-driven marketplace for crypto structured products.

With its joining onboard, the Hong Kong-based digital asset manager looks to accelerate the development of the on-chain settlement framework.

Hashkey Capital’s sister company Hashkey Exchange was Hong Kong’s first licensed retail virtual asset exchange after it obtained the relevant licence from the Securities and Futures Commission (SFC) last summer.

Zodia Custody partners with 21Shares for crypto ETP custody services

Zodia Custody, a digital asset custodian backed by Standard Chartered Ventures, has partnered with exchange-traded product issuer 21Shares to provide custody services for physically backed ETP products in Switzerland and the wider European market.

While the partnership brings an ‘additional layer of security' to its physically-backed ETPs through the custodian partnership, institutions using 21Shares for ETP investments will also benefit from cold-storage wallets with 24/7 access, the company said.

The latest partnership came after the custodian secured approval in principle from the Abu Dhabi Global Market last September to operate as an over-the-counter crypto broker-dealer in Abu Dhabi.

BounceBit rolls out funding rate arbitrage strategy products

BounceBit announced the offering of a funding rate arbitrage strategy products for Bitcoin and Tether (USDT), integrating ‘principles from Merrill Lynch Investment Clock framework and Ray Dalio’s All-Weather theory.’

According to the native digital asset infrastructure provider that offers institutional products and restaking use cases, there are four stages of the strategy-focused products: In times of economic recovery with low inflation and increasing growth, it will offer products that focus on leveraging discrepancies in funding rates to capitalise on increased trading volumes and market volatility.

In the overrated economy, BounceBit said it will introduce structured products linked to commodity-backed tokens or real-world assets that aim to ‘hold value better in inflationary environments.’

In the stagflation phase, it will offer lending and fixed-income products that provide ‘stable returns’ while in the reflation phase, it will provide lending products to ensure users have access to liquidity during market downturns.

The latest development came after BounceBit closed a US$6m seed funding round earlier this year led by Blockchain Capital and Breyer Capital to build BTC Restaking infrastructure. The funding was participated in by 17 protocols and firms, including Bankless Ventures and Matrixport Ventures.

Image: Adobe Stock.

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