Singapore's financial regulators and exchange operator are joining forces to solve a technical problem that has long plagued global finance: how to move money and securities between blockchains withou
Singapore's financial regulators and exchange operator are joining forces to solve a technical problem that has long plagued global finance: how to move money and securities between blockchains without either party risking default.
The Monetary Authority of Singapore and Singapore Exchange announced Friday that they will develop new infrastructure for settling tokenized assets across multiple blockchain platforms. The system would let financial institutions and corporate investors exchange digital currencies and securities, eliminating both buyers' and sellers' risk in the settlement process and cutting operational costs.
Tinku Gupta, the exchange's head of technology and chair of the project, described the approach in a statement: "This initiative will deploy blockchain technology to efficiently link up funds transfer and securities transfer, eliminating both buyers' and sellers' risk in the Delivery versus Payment (DvP) process." He added: "This is a collaborative innovation bringing together multiple players to pursue real-world opportunities that will benefit the ecosystem."
Deloitte, Nasdaq, and Anquan Capital will serve as technology partners, producing a report by November that examines whether smart contracts can automate the settlement process and identifies the engineering decisions needed to keep the system reliable and protect investors. Anquan Capital brings prior experience, having run an earlier test with the exchange using the Bondchain platform.
The effort fits into Project Ubin, a broader attempt by the central bank to prove that blockchain technology can handle the clearing and settlement of payments and securities. The project launched in November 2016. In October 2017, the team working under Ubin built and tested software prototypes using three separate models for how independent banks could settle payments with each other on a decentralized system.
Sopnendu Mohanty, the central bank's chief fintech officer, said that blockchain technology is reshaping financial transactions, and that moving assets between different blockchains will unlock new business opportunities. "The involvement of three prominent technology partners highlights the commercial interest in making this a reality," he said. "We expect to see further growth in this space as fintechs leverage on the strong pool of talent and expertise in Singapore to develop innovative blockchain applications and benefit from the new opportunities created."
