J.P.Morgan Conducts On-Chain Transaction as DeFi Pilot Approved in Singapore

American banking and assets management heavyweight J.P. Morgan shared the details of its first-ever swap between tokenized fiat currencies. The unprecedented experiment took place as part of Project Guardian, an initiative backed by the Monethary Authority of Singapore.

J.P. Morgan uses Polygon (MATIC) to exchange SGD for JPY

Tyrone Lobban, head of J.P. Morgan’s Blockchain Launch and Onyx Digital Assets arms, announced today, Nov. 2, 2022, that the first-ever live trade between the two fiat currencies on the public blockchain happened on Polygon (MATIC).

WORLD! J.P. Morgan has executed its 1st *LIVE* trade on public blockchain using DeFi, Tokenized Deposits & Verifiable Credentials, part of @MAS_sg Project Guardian 🙌🚀🔥https://t.co/XI212SG4zg Many world 1sts here, & since this is public ⛓ here’s a transparent🧵on what we did:

— Ty Lobban (@TyLobban) November 2, 2022

According to the official statement by the MAS, it is the first industry pilot that explores the opportunities of the decentralized finance (DeFi) segment in corporate banking:

The first industry pilot under MAS’ Project Guardian that explores potential decentralised finance (DeFi) applications in wholesale funding markets has completed its first live trades.

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Mr. Lobban unveiled that Polygon (MATIC) blockchain platform was chosen for this trade due to its low fees compared to Ethereum (ETH). To perform the exchange, tokenized versions of the Japanese Yen (JPY) and Singapore Dollar (SGD) were released on Polygon (MATIC) by J.P. Morgan.

The design features Aave Finance’s permissioned pools concept: the organizers took a modified version of Aave Arc to customize exchange rates, interest rates and so on.

Crucial milestone for DeFi adoption in global banking

Besides live JPY/SGD exchange, the experiment organizers performed a real-time simulation of tokenized government bond purchasing.

Mr. Sopnendu Mohanty, chief fintech officer of MAS, stresses the importance of today’s experiment for industry leaders, institutions and regulators:

The live pilots led by industry participants demonstrate that with the appropriate guardrails in place, digital assets and decentralised finance have the potential to transform capital markets. This is a big step towards enabling more efficient and integrated global financial networks. Project Guardian has deepened MAS’ understanding of the digital asset ecosystem and has contributed to the development of Singapore’s digital asset strategy. We look forward to working with more institutions to advance global learning on policies, standards, and best practices for digital asset regulation and responsible innovation.

DBS Bank and SBI Digital Asset Holdings also took part in the series of experiments. J.P. Morgan’s pilot is of paramount importance to the progress of global DeFi adoption by leading banking institutions.