Singapore Gets First SGD-Backed Stablecoins

Singapore Gets First SGD-Backed Stablecoins

by January 8, 2019

A new stablecoin project called Singapore Dollar Rate (SGDR) has launched in Singapore.

Created by the team behind blockchain startup Rate, SGDR is said to be the first Singapore dollar-backed stablecoin, “guaranteeing users full redeemability for Singapore dollars on demand,” according to a company’s FAQ. Rate raised US$15 million in an initial coin offering (ICO) in 2018 that saw participation from Matrix Partners China, Node Capital, and FBG Capital, as well as Fenbushi Capital founder Bo Shen.

SGDR logoThe newly launched SGDR is targeted at investors for trading and hedging purposes for their digital asset portfolio. Further down the road, the company says it sees more complex use cases including micropayments, event-driven payments and even machine-to-machine payments between Internet-of-Things (IoT) devices.

“Stablecoins like SGDR helps bring to the masses the benefits of cryptocurrency minus price volatility,” Benjamin Ong, who recently joined Rate in a product management and strategy role, wrote in a blog post, noting that programmable money like SGDR could help Singapore achieve its Smart Nation goals.

“It allows for cheap, fast, and programmable transactions, which in turn will help unlock payment models that are not readily viable with today’s payments infrastructure, such as micropayments and event-driven payments.”

SGDR is backed by Singapore dollars, one of the eleven countries worldwide with a AAA sovereign credit rating by Standard & Poor’s, as of 2018, Rate claims.

All Singapore dollars are managed under an escrow account controlled by an independent Monetary Authority of Singapore-licensed trust company. Rate says the arrangement will later evolve into a full legal trust with the trustee undertaking fiduciary duties in ensuring token holders have legal beneficial ownership of the Singapore dollars as represented by SGDR tokens.

SGDR is not a licensed or registered under the Singapore Securities and Futures Act and is currently only available in closed-beta to accredited, expert or institutional investors.

SGDR leverages Rate’s Rate3 Network tokenization and cross-chain identity protocol. The Rate3 Tokenization Protocol is an end-to-end protocol for tokenization on both Ethereum and Stellar, while the Rate3 Identity Protocol is a protocol to create and manage a unified cross-chain identity.

Stablecoins have been all the rage in 2018 with many projects launching throughout the year. A stablecoin is a cryptocurrency that’s price is pegged to a real-world asset like gold or the dollar, providing the technological benefits of cryptocurrencies minus the price volatility.

Cryptocurrencies are notorious for their extreme price swings, leading critics to say that these are speculative investments rather than currencies or assets. The 2018 cryptocurrency crash, for instance, saw bitcoin fall by over 80% between January 2018 and November 26, 2018.

Stablecoins are an attempt to harness the benefits of cryptocurrencies, including low costs, fast transaction speeds, 24/7 settlement of funds, fractional ownership and programmability, and combine them with the stability and trust in mainstream currencies.

“For millions of individuals, tens of millions in our view, as well as institutions, the volatility of crypto assets that we saw last year really is keeping a number of people’s on the sidelines of the cryptocurrency movement,” Garrick Hileman, head of research at Blockchain, told Business Insider.

“Stablecoins can address that and enable a number of use cases that bitcoin or ether or other more volatile cryptocurrencies are suboptimal for – things like insurance.”

The launch of SGDR comes at a time when a number of stablecoin projects are being launched in Singapore.

Singapore-based cryptocurrency startup Mars Blockchain announced last week the launch of its stablecoin 1SG on exchange platforms Kryptono Exchange and Exchange. Like SGDR, 1SG is linked to the Singapore dollar with the goal to optimize the shortage of existing stablecoins such as USDT, TUSD and USDC.


Featured image credit: Freepik and SGDR