- For Project Guardian, run by the Monetary Authority of Singapore, which is researching how blockchain technology may alter the fixed-income market, Moody’s will supply risk analysis.
- Stablecoins, tokenized deposits, fractionalized money, and other digital asset securities are a few financial instruments under investigation.
- A senior vice president for the company stated that the significance of strong cybersecurity protocols and legal frameworks is emphasized by the emerging digital threats associated with tokenization.
The credit rating behemoth Moody’s said on Wednesday that it is collaborating on Project Guardian, a public-private tokenization collaboration venture, with the Monetary Authority of Singapore in order to improve market efficiency.
The business intends to offer risk assessment for Project Guardian, which got underway in 2022. Moody’s will specifically be examining fixed-income instruments, such as tokenized deposits, fractionalized funds, stablecoins, and other securities backed by digital assets.
Fundamentally, tokenization redefines conventional asset ownership and transactional frameworks by fusing digitalization with physical assets. Tokenization has the ability to significantly accelerate growth with its advanced technological frameworks and streamlined or interoperable infrastructures, Moody’s Head of Strategy for Digital Economy Rajeev Bamra said.
Some of the largest international financial institutions are becoming interested in tokenization, the act of expressing physical assets as digital tokens on a blockchain, because they view it as a way to improve the efficiency and transparency of investment.
Moody’s said on January 15th, 2023, that the value of tokenized funds increased from $100 million to around $800 million in 2023, driven mostly by the growing tokenization of US Treasury bonds. Today, that figure stands above $1.5 billion. Firms including BlackRock, Franklin Templeton and UBS Asset Management have deployed tokenized funds on public blockchains.
According to Bamra, the industry will probably pick up speed as more institutions and investors become aware of the capabilities and strong infrastructure that underpin these on-chain goods.
Bamra said that these developments provide new opportunities for fractional ownership and worldwide market involvement, democratize access to formerly illiquid assets, and improve transactional transparency. Bamra mentioned a variety of industries, including real estate, intellectual property, and the arts.
Policymakers from all over the world, including the FSA, FINMA, and FCA of the United Kingdom, as well as significant financial organizations including Deutsche Bank, Citi, and Apollo, are involved in the multi-year Project Guardian. Pilot programs are being conducted in the foreign exchange, asset management, and fixed-income industries.
According to the company, Moody’s independent risk evaluation aims to lower systemic risks, improve market transparency, and promote the expansion of the tokenization sector. As to Bamra’s observation, the rise in cyber threats highlights the necessity of strong cybersecurity protocols and legal structures to ensure the reliability and authenticity of tokenized assets.
The company’s analysts have previously stated that creating secondary markets based on blockchain technology is essential to accelerating the adoption of real-world assets.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
