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The Monetary Authority of Singapore\u2019s (MAS) decentralized finance pilot program just executed \u201cthe first real-world use case for institutional-grade DeFi protocols,\u201d Aave founder Stani Kulechov told <\/span>Decrypt<\/span><\/i>.\u00a0<\/span><\/p>\n J.P. Morgan, DBS Bank and SBI Digital Asset Holdings yesterday used the Aave protocol on Polygon\u2014a layer-2 scaling solution\u2014to complete foreign exchange and government bond transactions on the Ethereum network. The banks exchanged tokenized versions of Singapore government securities bonds for Japanese government bonds, and Japanese Yen for Singapore Dollars as a test.\u00a0<\/span><\/p>\n \u201cWe look forward to welcoming more innovation that leverages composable DeFi protocols to provide access to many underserved markets and enable a more inclusive system,\u201d Kulechov told <\/span>Decrypt<\/span><\/i> over Telegram.<\/span><\/p>\n Polygon co-founder Sandeep Nailwal echoed his optimism.<\/span><\/p>\n \u201cHardcore financial institutions are being increasingly comfortable in experimenting with public blockchains,\u201d he wrote <\/span>on Twitter<\/span><\/a> yesterday. \u201cEventually some of them are going to crack the use cases [that add] value to their core business models and that will potentially open the floodgates for mass adoption.\u201d<\/span><\/p>\n MAS has said one of the big driving factors behind the pilot program, which was announced in May, has been making markets more efficient.<\/span><\/p>\n Banks being able to transact directly with another another \u201cfrees up costs involved in executing trades through clearing and settlement intermediaries, and the management of bilateral counterparty trading relationships as required in today\u2019s over-the-counter markets,\u201d MAS said in <\/span>its announcement<\/span><\/a>.<\/span><\/p>\n <\/p>\n The government transactions were not the only news to come of the Singapore Fintech Festival this week. Early Wednesday morning, stablecoin issuers Paxos (Pax Dollar and Binance USD) and Circle (USD Coin and Euro Coin) announced they were approved to operate in Singapore.\u00a0<\/span><\/p>\n Paxos has permission to offer digital payment token services, and Circle received in-principle approval to operate as a major payments institution in the country, which means it can issue cryptocurrencies and facilitate domestic and cross-border payments.<\/span><\/p>\n The approvals come after MAS released two different regulatory framework proposals for how regulators might oversee stablecoins.<\/span><\/p>\n \u201cThat\u2019s a huge signal, a super huge signal from a central bank making a call on [crypto] assets,\u201d Sopnendu Mohanty, MAS Chief Fintech Officer, told Nasdaq\u2019s <\/span>TradeTalks<\/span><\/a> at the event.<\/span><\/p>\n