Paxos has secured the full approval from the Monetary Authority of Singapore (MAS) to issue stablecoins under the regulator’s upcoming stablecoin framework.
This approval allows Paxos to offer digital payment token services through its entity, Paxos Digital Singapore Pte. Ltd., as a Major Payments Institution.
With this approval, Singapore joins the US and the United Arab Emirates as markets where Paxos can issue stablecoins, as the company works towards expanding its global footprint.
Paxos has selected DBS Bank, Southeast Asia’s largest bank by assets, as its primary banking partner for cash management and custody of stablecoin reserves.
Walter Hessert, Head of Strategy at Paxos, said,
“Stablecoins issued in accordance with standards set by a regulator like MAS – known for its rigorous regulatory standards – represent a significant step towards democratising access to commerce and financial services.
Receiving approval from MAS is an important step for Paxos and our global enterprise partners to safely offer access to US dollars to more users around the world.”
Evy Theunis, Head of Digital Assets, Institutional Banking Group at DBS Bank, said,
“We firmly believe that trust and security are key to wider stablecoin adoption. Having examined all relevant aspects that come with managing reserve assets, stablecoin issuers will find that our solutions will help them meet the robust standards regulators and customers expect from them.
This partnership further expands DBS’ wide-ranging involvement across the digital asset ecosystem, of which we have been a pioneer and innovator for several years now.”
This development follows the earlier announcement in November 2023, where Paxos, along with StraitsX, received In-Principle Approvals (IPA) from MAS to issue stablecoins.
The stablecoins, including StraitsX’s XSGD and XUSD pegged to the Singapore Dollar and US Dollar respectively, and Paxos’s new US Dollar-backed stablecoin, are set to become “MAS-regulated stablecoins” upon legislative amendments.
Under MAS’s proposed stablecoin regulatory framework, these stablecoins must 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.
Additionally, these assets will undergo bi-monthly independent audits, with reports available on the companies’ websites, and will be segregated from corporate assets, held in custody by a MAS-regulated financial institution.
The framework also includes a redemption mechanism that 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.