Moody’s Provides Risk Analysis for Project Guardian’s Tokenized Fixed Income Products

Ratings agency Moody’s has announced it will be involved in the Monetary Authority of Singapore (MAS) backed project Guardian by providing risk management services for tokenized fixed income products.

Project Guardian was launched in 2022 to and aims to improve liquidity and efficiency of financial markets through asset tokenization while managing risks to financial stability.

The policymaker group and members supporting Project Guardian includes the UK regulatory body Financial Conduct Authority, the Financial Services Agency in Japan, the International Monetary Fund, the Monetary Authority of Singapore, the Swiss Financial Market Supervisory Authority and the Banque de France.

“Moody’s is entering a new era of brand identity, innovation, and collaboration, and we’re proud to be part of this project at the forefront of asset tokenization,” said Wendy Cheong, managing director and regional head of Asia-Pacific for Moody’s Ratings in a press release.

The ratings agency will provide risk analysis for tokenized fixed income products. This may involve fixed-income securities, fund units, stablecoins, tokenized deposits, and other components of the digital finance ecosystem, said the firm in a press release.

JP Morgan Explores Tokenization With Project Guardian

JPMorgan has been actively exploring blockchain technology and tokenization through initiatives.

In 2023, JP Morgan’s Onyx and Apollo collaborated under Project Guardian. The bank worked with the project to deliver a proof-of-concept using permissioned blockchain infrastructure to test how tokenization and smart contracts could work in the asset management sector.

Moody’s said working with Project Guardian reflects the firm’s commitment to transparency, and risk analysis in financial markets.

“We are excited about the potential of tokenization to transform the financial landscape,” said Fabian Astic, managing director and global head, digital economy at Moody’s Ratings.

Tokenization Trend Gains Momentum in 2024

The tokenization trend continues to gain momentum

in 2024 with the primary focus being on digital assets and payment systems. Tokenization of debt, derivatives, and structured products requires converting these instruments into digital tokens on the blockchain or distributed ledgers and remains overlooked.

Tokenizing traditional assets has caught the attention of legacy financial institutions. To put things into perspective when it comes to tokenization, there are several investment banks involved, primarily in the context of digital assets and payment systems.

It is important to note that tokenization in the lending space whether this involves debt, derivatives, and structured products is still in early exploratory stages.