Singapore MAS Tokenized Fund Regulatory Approach

MAS Regulatory Framework for Tokenized Fund Products

The Monetary Authority of Singapore (MAS) has adopted an industry-collaborative approach to tokenized fund regulation through Project Guardian, which has grown from its May 2022 launch to encompass 40+ financial institutions — including Ant Group, Apollo, DBS, Franklin Templeton, Hamilton Lane, OCBC, UBS Group, JPMorgan, and Standard Chartered. The initiative spans multiple workstreams covering tokenized bank liabilities, funds, foreign exchange, and interoperability standards. In August 2025, IMAS (Singapore) and the UK Investment Association became the first asset management industry groups to join Project Guardian, and MAS partnered with Deutsche Bundesbank for cross-border digital asset settlements.

Project Guardian Fund Pilots

Project Guardian’s fund-related pilots include:

DBS-JPMorgan tokenized fund settlement: Tested atomic settlement of tokenized fund units against tokenized deposits, demonstrating that fund creation and redemption can settle in under 30 seconds (versus T+2-3 in traditional systems). The pilot used permissioned Ethereum and simulated both cash creation and in-kind creation mechanics. Building on this success, MAS plans a 2026 CBDC pilot settling tokenized government bills using wholesale CBDC, with DBS, JPMorgan, and Standard Chartered as trial banks.

Franklin Templeton-SBI tokenized money market fund: Extended Franklin Templeton’s US BENJI model ($1.01 billion AUM, now deployed across 9 chains) to the Singapore market, testing cross-border distribution of tokenized fund units to professional investors in Asia-Pacific.

UBS tokenized fund platform: Explored multi-manager fund platforms where tokenized fund units from different managers can be held, traded, and settled through a unified DLT infrastructure.

Operational framework for tokenized funds: Project Guardian published a key operational framework proposing a spectrum from “Digital Mirror” models (replicating existing fund structures on-chain) to advanced fully on-chain models. A separate report with ISDA and Ant International examined the use of tokenized bank liabilities for FX settlement and cross-border payments.

Regulatory Sandbox Framework

MAS’s regulatory sandbox (the “Sandbox Express” and “Sandbox Plus” programs) provides a structured environment for testing tokenized fund products with relaxed regulatory requirements. Sandbox participants benefit from: temporary exemptions from specific licensing requirements; reduced capital requirements during the sandbox period; and dedicated MAS engagement through the fintech regulatory officer.

For tokenized fund products, the sandbox framework allows fund managers to test: blockchain-based share issuance and transfer; automated NAV calculation using oracle networks; smart contract-based compliance enforcement; and cross-border distribution through DLT networks.

The sandbox approach contrasts with the SEC’s enforcement-based framework and the EU’s comprehensive legislation approach. MAS’s preference for experimentation-before-regulation has produced practical operational data that other jurisdictions — including Hong Kong — have used to inform their own frameworks.

Variable Capital Company Framework

Singapore’s Variable Capital Company (VCC) structure, introduced in 2020, provides a fund vehicle particularly suited to tokenization. VCCs offer: sub-fund structures with segregated liability; flexible share capital (units can be issued and redeemed without court approval); and tax incentive schemes (Section 13O, 13U, and 13D) that attract fund managers to domicile in Singapore.

Several tokenized fund products have been structured as VCCs, leveraging the structure’s flexibility for DLT-based share operations. The VCC framework’s absence of minimum subscription amounts and its allowance for flexible share dealing make it operationally compatible with blockchain-native fund share issuance.

MAS Guidelines on Digital Token Offerings

MAS’s Guide to Digital Token Offerings (updated November 2023) provides the regulatory framework for token issuance in Singapore. The guide confirms that tokens representing fund units constitute “capital markets products” under the Securities and Futures Act (SFA), subjecting them to the same regulatory requirements as traditional fund units.

Fund managers issuing tokenized fund units in Singapore must: hold a Capital Markets Services (CMS) license for fund management; comply with the SFA’s prospectus requirements for public offerings (or qualify for an exemption for offers to accredited investors); and satisfy MAS’s technology risk management guidelines (TRM Guidelines) for the DLT infrastructure supporting tokenization.

The comparison of Asia-Pacific regulatory approaches positions Singapore alongside Hong Kong as the region’s most developed jurisdiction for tokenized fund products, with complementary strengths: Singapore offers a more collaborative sandbox environment, while Hong Kong provides more explicit fund-specific authorization criteria.

MAS Technology Risk Management Guidelines for DLT

MAS’s Technology Risk Management Guidelines (TRM Guidelines), last updated in January 2021, establish the technology governance framework that applies to all financial institutions in Singapore, including fund managers operating tokenized products. For DLT-based fund operations, the TRM Guidelines require:

System availability and resilience: Fund managers must maintain system availability targets for DLT infrastructure supporting tokenized fund operations. The TRM Guidelines specify that critical systems must achieve 99.5% availability, with recovery time objectives (RTO) of four hours for critical functions. For tokenized fund products, this requirement extends to the blockchain network, smart contract infrastructure, and wallet management systems.

Penetration testing: Annual penetration testing of DLT infrastructure, including smart contract security assessments, is mandatory. MAS expects penetration tests to cover: smart contract vulnerabilities (reentrancy, overflow, access control); node infrastructure (consensus manipulation, network partitioning); and key management systems (HSM security, backup procedures). The smart contract audit guide examines these requirements in detail.

Incident management: Technology incidents affecting tokenized fund operations must be reported to MAS within one hour of detection for material incidents. The incident management framework covers: smart contract failures, blockchain network outages, unauthorized token transfers, and oracle network data feed disruptions.

Third-party risk management: Fund managers using third-party blockchain platforms, custodians, or tokenization service providers must conduct due diligence, establish service level agreements, and maintain exit strategies. This requirement addresses the concentration risk that arises when multiple tokenized fund products depend on a single blockchain platform or infrastructure provider.

Cross-Border Distribution and MAS Mutual Recognition

Singapore’s extensive network of bilateral regulatory cooperation agreements supports cross-border distribution of tokenized fund products. Key arrangements include:

ASEAN CIS framework: The ASEAN Collective Investment Scheme (CIS) framework enables cross-border fund distribution among participating ASEAN jurisdictions (Singapore, Malaysia, and Thailand). While the CIS framework has not been tested with tokenized fund products, MAS has indicated openness to including tokenized funds within the cross-border distribution framework, subject to host jurisdiction approval.

Singapore-Hong Kong mutual recognition: The MAS-SFC mutual recognition of fund products (effective in 2019) allows qualifying Singapore and Hong Kong funds to be distributed in each other’s markets. For tokenized fund products, this creates a potential distribution pathway between the two jurisdictions — both of which have established tokenized fund regulatory frameworks. A tokenized VCC fund authorized by MAS could potentially be distributed to Hong Kong professional investors under the mutual recognition arrangement.

Project Guardian cross-border pilots: Project Guardian’s Phase 2 includes cross-border tokenized fund distribution pilots, testing the settlement of tokenized fund shares purchased by investors in one jurisdiction and issued by fund managers in another. These pilots address practical challenges including cross-border delivery-versus-payment settlement, regulatory compliance verification across jurisdictions, and investor suitability assessments in the host jurisdiction.

Custodial Standards and MAS Requirements

MAS’s custody requirements for tokenized fund assets reflect the regulator’s emphasis on risk management over prescriptive technical standards. Fund custodians in Singapore must:

• Hold a Trust Business licence or Capital Markets Services licence with custody authorization
• Maintain segregated wallets for each fund’s tokenized assets, with verifiable on-chain segregation
• Implement multi-signature or threshold signature schemes for token transfers, preventing single-point-of-failure key management
• Maintain insurance coverage for digital asset custody risks, including smart contract failure and unauthorized access
• Demonstrate operational capabilities for token recovery, including procedures for handling blockchain forks and smart contract migration

Major custodians operating in Singapore — including DBS, HSBC, Standard Chartered, and specialist digital asset custodians — have developed tokenized fund custody capabilities through Project Guardian participation. The qualified custodian requirements analysis examines how Singapore’s custodial standards compare with requirements in the US and EU.

SGX and Digital Asset Trading Infrastructure

The Singapore Exchange (SGX) has explored DLT applications for securities settlement and has participated in tokenized bond pilots with MAS and industry partners. SGX’s digital asset strategy includes:

• SGX Digital: A division focused on digital asset infrastructure, including tokenized securities listing and trading capabilities
• Fixed income tokenization: SGX has piloted tokenized bond issuance and settlement, providing infrastructure that could extend to tokenized fund products
• Integration with Project Guardian: SGX’s infrastructure has been used in Project Guardian pilots for tokenized fund settlement, testing the interaction between exchange-traded products and DLT settlement

For tokenized ETFs, SGX could serve as the listing venue — providing the regulated trading platform, market surveillance, and investor access that institutional tokenized ETF products require. The combination of SGX’s exchange infrastructure, MAS’s regulatory framework, and the VCC fund vehicle creates a comprehensive ecosystem for tokenized ETF products in Singapore.

Project Guardian Phase 2 and Institutional Scaling

Project Guardian’s Phase 2, launched in November 2024, expanded the initiative’s scope from proof-of-concept pilots to institutional-scale operational testing. Phase 2 introduces several enhancements relevant to tokenized fund products:

Multi-asset fund tokenization: Phase 2 pilots test tokenized fund products holding diversified multi-asset portfolios — combining tokenized equities, bonds, and alternative assets within a single fund vehicle. This extends Phase 1’s focus on single-asset products (primarily money market and Treasury funds) to the more complex portfolio structures that institutional investors require.

Institutional distribution infrastructure: Phase 2 includes distribution pilots where tokenized fund units are offered through institutional channels — private banks, wealth management platforms, and fund distribution networks — testing the end-to-end investor experience from wallet onboarding through fund subscription to ongoing portfolio reporting.

Cross-border settlement: Building on MAS’s existing cross-border payment infrastructure (including Project Ubin+), Phase 2 tests tokenized fund settlement across jurisdictions, addressing the practical challenges of multi-currency settlement, regulatory compliance verification, and investor suitability assessment across borders. Participating institutions include DBS, JPMorgan, UBS, and Standard Chartered.

The institutional data generated by Phase 2 pilots is expected to inform MAS’s transition from sandbox-based experimentation to permanent regulatory frameworks for tokenized fund products, with formal regulatory guidance anticipated in 2027.

Comparison with EU and US Approaches

Singapore’s collaborative sandbox approach contrasts with the EU’s legislative approach (MiCA and the DLT Pilot Regime) and the SEC’s enforcement-based framework. Key differences include:

• Regulatory methodology: MAS develops regulation through industry collaboration and pilot programs, producing rules informed by operational evidence. The EU develops comprehensive legislation through institutional processes, potentially producing rules before operational evidence is available. The SEC has not developed specific tokenized fund regulation, relying on existing frameworks.
• Speed of innovation: Singapore’s sandbox approach enables faster experimentation, with 15+ pilots completed under Project Guardian since 2022. The EU DLT Pilot Regime became operational in March 2023 but has attracted fewer participants. The US has no formal pilot program for tokenized fund products.
• Market reach: The EU’s regulatory framework applies across 27 member states with a combined fund market of EUR 20 trillion. Singapore’s framework applies to a smaller domestic market but leverages cross-border arrangements for regional distribution.

For global fund sponsors, Singapore’s approach offers advantages for testing and iterating tokenized fund products before deploying them in larger markets. The insights gained from Project Guardian pilots have informed regulatory development in Hong Kong, Australia, and other jurisdictions.

Stablecoin Regulation and Fund Settlement in Singapore

MAS’s stablecoin regulatory framework, finalized in August 2023, establishes licensing requirements for single-currency stablecoins pegged to the Singapore dollar or other G10 currencies. Licensed stablecoin issuers must maintain full reserve backing, provide redemption at par, and satisfy capital and governance requirements. For tokenized fund products in Singapore, MAS-regulated stablecoins provide a settlement instrument with regulatory certainty — enabling atomic delivery-versus-payment for fund creation and redemption without relying on traditional banking settlement.

The combination of Project Guardian infrastructure, VCC fund vehicles, MAS regulatory sandboxes, and regulated stablecoin settlement creates what is arguably the most comprehensive institutional tokenized fund ecosystem in Asia-Pacific. Fund sponsors evaluating Singapore as a domicile or distribution market benefit from this integrated ecosystem, which reduces the infrastructure development burden that sponsors face in jurisdictions where regulatory and technology components are less mature.

Singapore’s MAS framework is compared with EU standards published by ESMA — where 53+ MiCA CASPs have been licensed and the DLT Pilot Regime was extended through December 2025 — and Swiss standards published by FINMA.

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