Singaporean financial institutions have experimented with cryptocurrency and DeFi in the most advanced exploration project ever done by big banks, institutions and regulators
As reported by Cointelegraph, DBS Bank, a major Asian financial institution, uses DeFi technology to test foreign exchange (FX) and government securities trading in a project backed by the Monetary Authority of Singapore (MAS).
Conducted on a public blockchain, the test trade included the purchase and sale of tokenized Singapore government securities, Japanese government bonds and the fit currencies of both Singapore and Japan. The bank uses permissioned, or private, DeFi liquidity pools to perform transactions. It is part of Project Guardian, a collaborative cross-industry effort pioneered in May.
A spokesperson for DBS declared that Project Guardian was performed on the Polygon mainnet using a fork of Uniswap v2 protocol. The project has illustrated that trading on a private DeFi protocol enables simultaneous operations of instant trading, settlement, clearing and custody. However, moving closer to an institutional-grade DeFi protocol requires two key implementations: verifiable credentials and price oracles.
DBS believes the initiative could potentially transform the existing trading processes by providing better liquidity across multiple financial assets and markets. Those liquidity pools enable faster trading, greater transparency, lower settlement risks and other benefits.
DBS’ head of strategy Han Kwee Juan also mentioned that highly liquid markets attract more investors and add efficiency, bypassing intermediaries.