This is done through a process called tokenisation – which involves using a software programme to convert ownership rights over an asset into a digital token. Many items can potentially be tokenised: financial assets like cash and bonds, real assets like artwork and property, even intangible items like carbon credits and computing resources. In other words, anything that has value, when tokenised, becomes a digital asset. Digital assets are typically deployed on distributed ledgers that record the ownership and transfer of ownership of these assets. A blockchain is a type of distributed ledger that organises transaction records into blocks of data which are cryptographically linked together. When deployed on distributed ledgers, digital assets are referred to as crypto assets. It is this innovative combination of tokenisation and distributed ledgers that offers transformative economic potential. It basically allows anything of value to be represented in digital form, and to be stored and exchanged on a ledger that keeps an immutable record of all transactions. It is this crypto or digital asset ecosystem that supports use cases which can potentially facilitate more efficient transactions, enhance financial inclusion, and unlock economic value. This digital asset ecosystem is where MAS sees strong potential and is actively promoting. I have not said anything yet about cryptocurrencies. Let me come to that now. A cryptocurrency is the digital asset issued directly by the distributed ledger protocol.

We are taking a four-pronged approach to building the digital asset ecosystem. first, explore the potential of distributed ledger technology in promising use cases; second, support the tokenisation of financial and real economy assets; third, enable digital currency connectivity; and fourth, anchor players with strong value propositions and risk management. EXPLORE POTENTIAL OF DISTRIBUTED LEDGER TECHNOLOGY IN PROMISING USE CASES The most promising use cases of digital assets in financial services are in crossborder payment and settlement, trade finance, and pre- and post-trade capital market activities. There are several promising developments, including in Singapore. In cross-border payments and settlements, wholesale settlement networks using distributed ledger technologies such as Partior – a joint venture among DBS, JP Morgan and Temasek – are achieving reductions in settlement time from days to mere minutes. In trade finance, networks like Contour – formed by a group of trade banks – are establishing common ledgers with traceability to automate document verification, enabling faster financing decisions and lower processing cost. In capital markets, Marketnode – a joint venture between SGX and Temasek – is leveraging distributed ledger technology to tokenise assets, which reduces the time needed to clear and settle securities transactions, from days to just minutes. SUPPORT TOKENISATION OF FINANCIAL AND REAL ECONOMY ASSETS The concept of asset tokenisation has transformative potential, not unlike securitisation 50 years ago. Tokenisation enables the monetisation of any tangible or intangible asset. It makes it easier to fractionalise an asset or split up its ownership.