25th August 2026
By Shubhii Verma
A new industry initiative in Singapore is seeking to establish clearer governance and risk-management standards for banks and other financial institutions using permissionless blockchains, as tokenised securities and regulated digital assets increasingly move onto public networks.
The initiative, Project Pigeon, brings together industry organisations, digital-asset companies, and law firm Baker McKenzie Wong & Leow. The working group aims to develop practical frameworks for financial institutions across Asia-Pacific that want to use public blockchains while meeting regulatory and risk-management requirements.
Project Pigeon Targets Four Key Blockchain Risks
The project focuses on four major areas: governance, technology risk, settlement finality and anti-money-laundering controls. Industry guidelines are expected to provide banks with a structured approach for assessing whether public blockchain infrastructure can be used safely for institutional transactions.
Under the Basel Committee on Banking Supervision’s current framework, tokenised traditional assets issued through distributed ledger technology fall within the cryptoasset framework. The distinction between permissioned and permissionless networks can have significant implications for banks’ capital requirements.
MAS Proposes Group 1 Treatment for Permissionless Cryptoassets
Singapore has been particularly active in reconsidering this approach. In April 2026, the Monetary Authority of Singapore (MAS) proposed a more risk-sensitive framework that could allow certain cryptoassets on permissionless blockchains to receive Group 1 treatment, provided they satisfy principle-based requirements designed to mitigate risks.
MAS also introduced interim conditions, including exposure and issuance limits, while the broader prudential framework is being finalised. For locally incorporated banks, the proposed exposure cap for qualifying permissionless cryptoassets is equivalent to 2% of Tier 1 capital, while issuance by banks would face a 5% Tier 1 capital cap.
Industry Groups Push for Greater Regulatory Flexibility
Industry groups have broadly welcomed the direction but have called for further flexibility. The International Swaps and Derivatives Association and Asia Securities Industry & Financial Markets Association said MAS’s approach was a step toward technology neutrality, while raising concerns about certain requirements and proposed exposure caps.
The regulatory debate is also unfolding internationally. In the United States, federal banking regulators clarified in March that eligible tokenised securities should generally receive the same capital treatment as their conventional equivalents. Importantly, the US framework does not distinguish between permissioned and permissionless blockchains for capital treatment.
This could provide an important reference point for Asian regulators as banks increasingly explore blockchain-based bonds, funds, stablecoins and other financial instruments.
Singapore Expands Its Institutional Tokenisation Strategy
Singapore’s wider digital-finance strategy is also moving toward institutional blockchain infrastructure. MAS has been exploring tokenised bank liabilities, regulated stablecoins and wholesale central bank digital currency through initiatives designed to test different forms of digital settlement. At the same time, MAS has acknowledged that institutional networks need features such as governance, reliable performance, predictable fees, settlement finality, privacy and regulatory compliance.
For banks, these issues are critical. Permissionless networks offer global connectivity, liquidity and interoperability, but they can also introduce challenges around anonymous participants, smart-contract vulnerabilities, governance, transaction reversibility and compliance.
Project Pigeon therefore represents a broader effort to create a bridge between open blockchain infrastructure and institutional financial controls. Rather than requiring banks to avoid public blockchains entirely, the emerging regulatory approach is increasingly focused on whether adequate safeguards can be applied.
As tokenisation expands across Asia-Pacific, the outcome could determine how easily banks participate in public blockchain markets. If initiatives such as Project Pigeon successfully establish common governance standards, permissionless networks could become a more practical infrastructure layer for regulated financial institutions rather than remaining primarily associated with retail crypto markets.
