MAS highlights need to balance innovation with regulatory oversight

Speaking at the FIA Asia 2025 conference in Singapore on Wednesday, Tuang Lee Lim, assistant managing director for capital markets at Monetary Authority of Singapore (MAS), pointed to the importance of innovation, supervision and partnership as technology developments such as AI and tokenisation transform financial and derivatives markets.

From generative AI and large language models to agentic AI, Lim observed the increasing AI use cases that are sweeping through financial markets, changing how market participants are adopting operational efficiency and brokering deals.

Tokenisation and distributed ledger technology are also driving a wider range of products, whether it be money market funds to how collateral is managed.

“Regardless of technology, the core vision of MAS is to maintain fairness, integrity and transparency,” said Lim.

Through a technology neutral approach, Lim emphasised the need to balance regulatory oversight with the support for innovation.

On innovation, tokenisation is a priority focus as MAS looks into hurdles such as the need for legal and regulatory certainty while enabling interoperability of networks and protocols.

In November, MAS launched a Guide on the Tokenisation of Capital Markets, ensuring that it uses a “same activity, same risk, same regulatory outcome” approach to tokenisation. With distributed ledger technology, while it is regulated in the same way as traditional securities, the key is to ensure that new risks are disclosed to customers.

MAS plays an integral role at an international through its leadership in the IOSCO fintech taskforce and is examining the current use cases in tokenisation and their implications on market integrity.

From a standardisation and interoperability perspective, mitigating liquidity fragmentation is a key priority for MAS. Project Guardian is one such initiative as it serves as a cross-border sandbox that enhances liquidity and efficiency through asset tokenisation. It aims to foster global collaboration and sharing between ledgers.

“The idea is to build a highway to different villages so people can travel across networks,” said Lim.

With the present inflection point in the market, adaptability and vigilance are key for MAS.

MAS and Germany’s Deutsche Bundesbank have partnered to collaborate on cross-border digital asset settlement between the two nations.

In November, MAS and its Indonesian counterpart Otoritas Jasa Keuangan have pledged to expand cooperation in fintech innovation.