New regulated stablecoin launched in Singapore to meet enterprise needs
Paxos aims to address regulatory concerns with its new offering, which aligns with the Monetary Authority of Singapore’s stablecoin framework
The stablecoin market has grown 15-fold since 2018 to reach a market capitalisation of over US$170 billion (S$223 billion) today, noted Paxos Singapore’s executive director Jeannie Lim.
This can be attributed to technological improvements, she said. “Blockchain technology has evolved to be faster and more cost-effective.
“For the first time, stablecoins are primed to be used for mainstream use cases like payments and real-time money movement.”
Amid this growing market, Paxos has launched its new USD-backed stablecoin USDG through its local entity Paxos Digital Singapore.
Stablecoin is a type of cryptocurrency whose value is pegged to a traditional asset like fiat currency or gold.
US-based crypto firm Paxos has been issuing its own USD-backed stablecoin USDP since 2018. It has issued over US$160 billion in stablecoin since then, according to Lim.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
The stablecoin market is expected to continue growing, with brokerage firm Bernstein estimating that it could reach US$2.8 trillion by 2028.
Recent developments in the space also indicate increased demand, Lim noted. This includes payments giant PayPal’s launch of its own stablecoin – PYUSD, issued by Paxos – last August, and payment services provider Stripe’s move in October to allow merchants to accept stablecoins as payment.
Why stablecoins?
Stablecoins can bring various benefits, Paxos Singapore’s Jeannie Lim said, including:
- More inclusivity: Stablecoins can enable anyone with a blockchain wallet to make and receive payments.
- Less friction: Lower fees and higher-speed transactions reduce the need for intermediaries in cross-border payments.
- More stability: In regions with volatile fiat currencies, stablecoins could offer stability and protection against inflation as a stable store of value.
Despite growing demand, regulatory concerns persist. The cost of an enterprise developing and launching its own regulated stablecoin also remains prohibitive, said Lim.
Paxos aims to address these concerns with USDG. Its Singapore entity received approval from the Monetary Authority of Singapore (MAS) in June to offer digital payment token services as a major payments institution.
USDG aligns with MAS’ stablecoin framework – a move which Lim described as significant due to MAS’ commitment to maintaining high standards of consumer protection and its strong framework for overseeing stablecoins.
Paxos is also regulated by the New York Department of Financial Services in the US, and Abu Dhabi’s Financial Services Regulatory Authority.
The company has partnered with DBS for cash management and custody of USDG reserves. “DBS is an ideal partner for USDG as the company builds and launches cutting-edge, secure and regulated financial solutions,” said Lim. “Other stablecoins do not offer the same level of rigor or protection.”
Lim emphasised the importance of regulation in the stablecoin industry: “Comprehensive regulation, transparency and consumer protection are critical to the adoption and realisation of the full potential of stablecoins.”
“This is the backbone for all Paxos-issued assets,” said Lim. “This is what sets Paxos-issued assets, like USDG, apart from other stablecoins in the industry.”
This was produced in partnership with the Monetary Authority of Singapore and the Global Finance & Technology Network.
For more stories, go to https://bt.sg/sff2024
Share with us your feedback on BT's products and services
