Japanese and Singaporean regulators collaborate on crypto pilot project.

On June 26th, the Financial Services Authority (FSA), Japan’s financial regulator, announced a partnership with Singapore’s Monetary Authority (MAS) to jointly regulate and pilot test cryptocurrency projects in accordance with MAS’ “Project Guardian” initiative. The FSA’s participation will be limited to observer capacity in the current phase. The regulators said:

“The project aims to test the feasibility of applications of digital technologies such as asset tokenization through pilot experimentations, while managing risks to financial stability and integrity. Current industry pilots include fixed income, foreign exchange, and asset & wealth management.”

Project Guardian, established by MAS in May 2022, seeks to test the “feasibility of applications in asset tokenisation and DeFi,” in accordance with proper regulations. The project has four areas of focus; open and interoperable networks, trust anchors, asset tokenization, and institutional grade DeFi protocols. One notable project from the initiative saw DBS Bank, JP Morgan, and SBI Digital Asset Holdings conduct foreign exchange and government bond transactions against liquidity pools comprising of tokenised Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD).

HSBC, Marketnode, and UOB have also completed a pilot test of a blockchain-structured product, while UBS is exploring the issuance of Variable Capital Company funds on digital asset networks. This collaboration follows a period of relaxation on crypto laws in Japan. On June 25th, Japan’s National Tax Agency ruled to exempt token issuers from a 30% tax on unrealized capital gains. Earlier this year, Japanese Prime Minister Fumio Kishida said that DAOs and NFTs could help support the government’s “Cool Japan” strategy as it explores Web3 usage.

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