Standard Chartered is launching a trade finance tokenisation pilot as part of a Monetary Authority of Singapore (MAS) initiative that is exploring the economic potential and value-adding use cases of the issuance of tokens linked to assets.

As part of Project Guardian, launched by the Singaporean regulator in May this year, the bank is leading a project to digitise the trade distribution market by transforming trade assets into transferable instruments that are more transparent and accessible to investors.

“Digital assets are here to stay, and we see its potential to play a greater role in supporting the real economy. By transforming trade assets into transferable instruments, we aim to improve [their]accessibility to an asset class which has largely been the domain of banks with participation from a broader range of investors,” says Kai Fehr, Standard Chartered’s global head of trade and working capital. “Not only can we potentially narrow the US$1.7tn global trade finance gap, this also offers investors the option to balance their portfolio with a digital token that has traceable intrinsic value.”

The aim of the pilot is to create an asset tokenisation use case for financial services, as well as reveal potential risk management issues. MAS says it will use the findings to study the regulatory and risk management implications of tokenised asset transactions.

Leveraging tokenisation to bring more liquidity into trade finance is fast becoming a key area of focus for the industry. In July this year, Tradeteq, a technology provider for trade finance asset distribution, started to fractionalise and tokenise pools of repackaged securitised trade finance assets on the XDC blockchain network, using what it called the first-ever fully regulated, trade finance-backed fungible security token.

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