Singapore Testing Institutional DeFi on Ethereum 

The Monetary Authority of Singapore (MAS) has a decentralized finance pilot program that has just executed “ the first real-world use case for institutional-grade Defi protocols” according to Stani Kulechov of Aave.

DBS Bank, SBI Digital Asset Holding, and J.P Morgan all used the Aave protocol on Polygon to complete foreign exchange and government bond transactions. The banks exchanged tokenized versions of Singapore government securities bonds for Japanese government bonds, and Japanese yen for Singapore Dollars in a test.

Kulechov stated that Aave looks forward to welcoming more innovation that leverages composable DeFi protocols to provide access to many underserved markets thus enabling a more inclusive system.

It would appear that major financial institutions are becoming more comfortable with the idea of working with blockchain technology and as more experimentation takes place more use cases are going to be found by these institutions. These new use cases could be the catalyst in creating mass adoption of blockchain technology.

Banks using blockchain technology will be able to transact directly with one another which will free up costs involved with these types of transactions, this translates into fewer fees or even no fees for banking transfers which is always a good thing as some bank transfers can be outrageously high. The MAS made a statement that echoes this sentiment 

“Banks being able to transact directly with another another “frees up costs involved in executing trades through clearing and settlement intermediaries, and the management of bilateral counterparty trading relationships as required in today’s over-the-counter markets,”

Government transactions were just a bit of the blockchain news that came out of Singapore this week during the Singapore Fintech Festival. Wednesday morning say the stablecoin issues Paxos and Circle both announce they were approved to operate in Singapore

Paxos received permission to offer token-serviced digital payments while Circle received in-principle approval to operate as a major payments institution, this means Circle has the authority to issue crypto and facilitate payments both domestically and internationally all from Singapore. Both of these approvals came after two different regulatory proposals on how regulators might oversee stablecoins were produced by the MAS.

MAS Chief Fintech Officer Sopnendu Mahanty stated how this was a “huge signal, a super huge signal from a central bank making a call on crypto assets”

Stablecoins are meant to follow the flow of the physical dollar thus following the flow of supply, demand, and other things such as interest rates and inflation. The version used in the pilot test was one that was altered to zero inflation, more work is to be done in order to get things to peak position. Most needs are discussed in bank white papers that you can read here


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