Singapore pivots from crypto and bets on tokenization

Singapore is doubling down on tokenized finance through a series of pilots in which its pending stablecoin draft legislation will play a supporting role.

The Monetary Authority of Singapore (MAS) is eager to build an institution-led digital finance ecosystem that distances itself from the volatility of the crypto market.

It is preparing to issue tokenized government bills settled in wholesale CBDC next year in a move MAS said could help its digital market reach “lift off” after years of experimenting with tokenization.

Dr Cheryl Wang from the Global Fintech Institute said Singapore is deliberately shifting its narrative away from its early open-door approach.

“Singapore is attracting large financial institutions and serious Web3 and cryptocurrency firms, but not the smaller, highly speculative retail trading platforms it once did,” she said. “The ‘everyone-can-try-crypto’ era in Singapore has ended.”

The scars from crypto collapses

Singapore has been jolted by a string of global crypto-related failures, which have reshaped its regulatory position.

Singapore’s sovereign wealth fund, Temasek Holdings, suffered a $275 million loss in 2022 after the collapse of FTX, which was a blow to the city’s efforts to cultivate a regulated crypto hub.

The damage coincided with the failure of Singapore-based crypto hedge fund Three Arrows Capital (3AC), which invested in Luna tokens before its crash the same year. The hedge fund lost roughly $8 billion in client assets and deepened scrutiny of the sector.

In 2022, then-managing director of MAS Ravi Menon labelled cryptocurrency “highly hazardous” and emphasized that MAS does not want Singapore to be a speculative crypto hub.

Dr Wang said Singapore is now recasting itself as a steward of the industry.

“In the last five years, Singapore has moved away from being an important stop for crypto testing. It now focuses on back-end systems, common rules, infrastructure, and building trust,” she said.

Common standards for cross-border settlement

Singapore is pushing for global coordination to build the infrastructure needed for tokenization.

At Singapore Fintech Week 2025, MAS Deputy Managing Director Sing Chiong Leong said the digital asset ecosystem will only scale if financial networks operate like global aviation, which relies on standardized protocol, interoperable systems, and trust.

“If you think of global aviation, planes can fly anywhere in the world because everyone follows the same standards…We need the same approach for cross border digital money and tokenized asset settlement.”

He said this ecosystem would not “emerge by chance,” and requires “hard work, and heavy lifting” from public and private collaboration.

MAS has warned that institutional risk creates fragmented “sub-scale walled gardens” unless common standards are adopted.

Innovation in “trusted” tokenization

Singapore is running one of the world’s most ambitious experiments in tokenization. It is in the process of turning traditional financial assets, such as government bonds or bank deposits into digital tokens that can move instantly on blockchain networks.

Singapore is building its future financial system in layers, with the SGD Testnet serving as the glue that ties the government’s different tokenization pilots together.

The SGD Testnet is the common blockchain network testing tokenized bonds settlements, money market funds and FX trades under Project Guardian, while also supporting digital Singapore dollar experiments under Project Orchid.

Professor of Finance Ben Charoenwong from Insead business school explains that tokenization in Singapore is rooted in “trusted tokenization” – a version of blockchain where banks and regulators play a leading role.

“Regulators understand that fully decentralized ‘trustless’ systems cannot meet basic anti-money laundering (AML) and Know Your Customer (KYC) requirements,” he said. “Turing complete blockchains simply can’t comply with the law.”

A “turing complete blockchain” is a powerful smart contract system that can run any computable program, but regulators can’t guarantee that every path the code takes is compliant with the law.

He said tokenization sandboxes focus on permissioned versions and testing whether they can still deliver efficiency gains once they are built in real-world governance, verified reserves, and proper oversight.

The most recent project, BLOOM, which launched in October, is expanding payment options beyond CBDC to include stablecoins, tokenized bank deposits, and wholesale payments to enable faster, safer, and more efficient cross-border payments.

Singapore is preparing to introduce stablecoin legislation next year, which will mandate high-quality liquid assets and redemption reliability. But Stablecoins are not Singapore’s top priority. MAS is placing much more strategic emphasis on wholesale CBDCs and tokenized deposits.

Professor Charoenwong warns that the real risks lie in systemic contagion from stablecoins.

“The real threat is not innovation,” he said. “It’s the spread of poorly regulated foreign stablecoins that can destabilize even well supervised markets.”

Expanding partnerships with banks

Singapore has struck new deals with a number of banks to test digital asset settlement across borders. On November 13, MAS signed a Memorandum of Understanding (MoU) with Deutsche Bundesbank to develop common standards. It has also announced experiments with the Bank of England and the Bank of Thailand for real-time FX using interoperable systems.

Singapore’s stock exchange is also preparing to launch exchange-cleared Bitcoin and Ethereum perpetual futures for institutional investors, part of an effort to shift crypto exposure into regulated market infrastructure.

Meanwhile, Swiss Investment bank UBS and Singapore-based digital payments company, Ant International, are testing tokenized bank deposits and real-time cross-border liquidity flows as a part of the MAS-led tokenization sandbox Project Guardian.

Wealth management firms in Singapore are also reporting rising demand for tokenized gold, tokenized treasuries, and blockchain fund structures, describing tokenization as a structural upgrade that increases capital efficiency.

As Dr Cheryl Wang from the Global Fintech Institute said, the coming era of tokenized finance and round-the-clock AI trading will test not just the resilience of new systems, but the values that underlie them. The challenge, she said, is to remember the underlying mission that drives digital finance.

She said “responsible innovation” will broaden inclusion, improve cross border payments, and ultimately enhance human welfare.

“Technology should empower people. It should never replace them.”

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