DBS fund pilot and Singapore’s tokenization rules

DBS Bank launched tokenized structured notes on the Ethereum blockchain for accredited and institutional investors. This move follows the bank’s previous expansion into digital currency options and structured notes. I find the shift toward $1,000 units for previously non-fungible instruments to be the most practical development for portfolio management.

DBS distributed these notes through local exchanges ADDX, DigiFT, and HydraX. The debut product pays out in cash when digital asset prices rise while limiting downside exposure. In the first half of 2025, DBS clients executed over $1 billion in trades involving these instruments. Trade volumes grew almost 60% from Q1 2025 to Q2 2025. This scale leaves little doubt regarding the demand for smaller, fungible units of complex products.

Rules for tokenized funds

The Monetary Authority of Singapore (MAS) regulates tokenized real-world assets under the Securities and Futures Act. MAS treats digital tokens with characteristics of capital markets products as securities. The regulatory framework includes the Capital Markets Services and Recognized Market Operator frameworks for platforms touching capital markets products. InvestaX, for example, holds both licenses to support regulated issuance and secondary trading.

Project Guardian, which MAS launched in 2022, uses a regulatory sandbox to test tokenization. This initiative involves over 40 industry participants developing the asset layer for fixed income, funds, and structured products. MAS published an Operational Guide for tokenized Funds in November 2025 to provide a shared framework for governance and investor onboarding. The guide helps fund managers, custodians, and service providers manage tokenization in a coordinated way.

Fund managers must meet specific competency requirements regarding blockchain technology and smart contract functionality. They must also establish risk management frameworks for technology risks and market liquidity. I notice that the regulatory burden for smart contract security and digital asset custody remains high. This complexity might slow down smaller firms attempting to enter the space.

Infrastructure and settlement

The Global Layer One (GL1) initiative, launched in June 2024, focuses on building a public permissioned foundational digital infrastructure. MAS and a group of global banks, including BNY, Citi, J.P. Morgan, MUFG, and Societe Generale-FORGE, define the business and technology requirements for this platform. GL1 aims to ensure tokenized assets interoperate across different platforms and jurisdictions.

The BLOOM initiative, launched in October 2025, extends settlement capabilities by enabling real-time, cross-border settlement for tokenized assets. This initiative develops the settlement-asset layer needed for assets to exchange with finality. In a separate trial, MAS tested tokenized MAS bills settled using a CBDC for overnight interbank lending.

DBS, Franklin Templeton, and Ripple signed a memorandum of understanding to provide trading and lending solutions. This partnership uses sgBENJI, the token of Franklin Templeton’s tokenized money market fund, alongside the RLUSD stablecoin. Eligible DBS clients trade RLUSD for sgBENJI tokens to rebalance portfolios. Franklin Templeton tokenizes sgBENJI on the XRP Ledger to provide speed and low transaction costs.

DBS explores helping clients use sgBENJI tokens as collateral for credit via repurchase transactions or third-party platforms. This setup allows clients to access wider liquidity pools. Can these programmable liquidity windows maintain stability during extreme market volatility?