Japanese and Singaporean financial regulators have joined forces in a partnership aimed at the regulation and pilot testing of cryptocurrency projects.
The Financial Services Authority (FSA) of Japan announced its collaboration with the Monetary Authority of Singapore (MAS) on 26 June, aligning with Singapore’s “Project Guardian” initiative. In the initial phase, the FSA’s involvement will be limited to an observer capacity.
The joint project’s objective is to assess the practicality of digital technology applications, including asset tokenization, through pilot experiments, while effectively managing risks to financial stability and integrity.
The ongoing industry pilots encompass various areas such as fixed income, foreign exchange, and asset and wealth management.
Launched by the MAS in May 2022, Project Guardian aims to explore the feasibility of asset tokenization and decentralized finance (DeFi) applications in compliance with regulatory requirements. It focuses on four key areas: open and interoperable networks, trust anchors, asset tokenization, and institutional-grade DeFi protocols.
This collaborative effort follows recent relaxations in cryptocurrency regulations in Japan. On June 25, it was reported that Japan’s National Tax Agency had exempted token issuers from a 30% tax on unrealized capital gains.
Furthermore, Japanese Prime Minister Fumio Kishida expressed support for decentralized autonomous organizations and non-fungible tokens, recognizing their potential to contribute to the government’s “Cool Japan” strategy and exploring Web3 applications earlier this year.