The Financial Conduct Authority (FCA) joins the ranks with Singapore’s central bank, the Financial Services Agency of Japan (FSA), and the Swiss Financial Market Supervisory Authority (FINMA) in a joint initiative to transform the global financial landscape. 

The venture will explore the intricacies of decentralised finance and look into the advantages, regulatory complexities, and commercial applications of asset and fund tokenisation. 

The main topics covered by the project include advancing legal and policy frameworks, risk assessment and policy alignment, common standards and best practices, interoperability, supportive regulatory sandboxes, and knowledge sharing.

The MAS joined with 15 financial institutions under Project Guardian to pilot projects in the realm of asset tokenisation. The pilots identified the need for closer cross-border collaboration among policy makers, according to the MAS. 

“Through this partnership, we hope to promote the development of common standards and regulatory frameworks that can better support cross border interoperability, as well as sustainable growth of the digital asset ecosystem,” said Leong Sing Chiong, deputy managing director of markets and development at the MAS.

The industries under the microscope are poised for substancial growth before the end of the decade. The global tokenisation market is expected to grow by a CAGR of 19% by 2026. DeFi market on the other hand is predicted to grow by a compound annual growth rate (CAGR) of 42.6% globally by 2030, which is a higher growth rate than the global artificial intelligence market. 

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Aside from addressing the impending growth in digital assets, the project also forges connections between these influential regulatory authorities. The UK being a unique opportunity as the largest asset management sector outside of the US. 

The UK manages £11.6 trillion in assets, which makes up 37% of all European assets. Interestingly, 65% of UK-managed assets are in overseas-domiciled funds, which further emphasises the need for cross border collaboration. 

“We are pleased to join Project Guardian. The UK’s asset management sector – which is the second largest in the world – sees significant potential in the use of distributed ledger technology to drive innovations, efficiencies, and enhanced value for customers,” said Sarah Pritchard, executive director of markets and international at the FCA.