StraitsX, Paxos Secure MAS Approval to Issue SGD and USD Stablecoinsby Fintech News Singapore November 16, 2023
Three entities have received In-Principle Approvals (IPA) from the Monetary Authority of Singapore (MAS) to issue stablecoins that will align with the central bank’s proposed stablecoin regulatory framework.
Stablecoins issued by the three entities – StraitsX SGD Issuance, StraitsX USD Issuance and Paxos Digital Singapore – will become “MAS-regulated stablecoins” upon legislative amendments.
Two of the approvals will facilitate the issuance of StraitsX XSGD and StraitsX XUSD, stablecoins pegged 1-1 to Singapore Dollars and US Dollars, respectively. The third approval is to Paxos Digital Singapore to issue a new stablecoin backed by the US Dollar.
Under the upcoming MAS stablecoin regulatory framework, StraitsX and Paxos issued stablecoins will adhere to stringent requirements. These include a Value Stabilising Mechanism, ensuring each stablecoin is backed by reserve assets equal to at least 100% of the outstanding stablecoins.
These assets will undergo bi-monthly independent audits, with reports available on the companies’ websites. Additionally, reserve assets will be segregated from their corporate assets and held in custody by a MAS-regulated financial institution.
The redemption mechanism assures holders the right to redeem their stablecoins for equivalent fiat currency within five business days of a legitimate request. Furthermore, the firms must maintain a base capital, assessed annually, to ensure sufficient liquidity for recovery or orderly winding up of operations.
StraitsX is currently experimenting with XSGD-backed purpose bound money in escrow arrangements for e-commerce transactions. This trial, in partnership with Amazon and Grab, was showcased at the festival, to ensure secure fund transfers between customers and merchants, enhancing transactional reliability.
“We are deeply honoured to be among the first to be recognised by the MAS as being substantively compliant with the requirements of the upcoming stablecoin framework, in advance of the legislative framework coming into force, and will remain committed to being transparent and trusted by our customers,”
commented Kenny Chan, the Head of StraitsX.
“This in-principle approval from the MAS will allow Paxos to bring its regulated platform to more users around the world. Because Paxos upholds the highest standards of compliance and oversight, global enterprises partner with us to power stablecoin solutions that drive their businesses and respond to their customers’ needs,”
said Walter Hessert, Paxos Head of Strategy.