now loading...
Wealth Asia Connect Middle East Treasury & Capital Markets Europe ESG Forum TechTalk

StraitsX gets MAS nod for pegged stablecoins
Platform’s XSGD, XUSD linked to Singapore, US dollar as value stabilizing mechanism
The Asset 17 Nov 2023

Singapore-based digital asset platform StraitsX has received in-principle approval (IPA) from the Monetary Authority of Singapore (MAS) as a major payment institution licensed for digital payment token services, for the purpose of issuing single-currency pegged stablecoins (SCS) that are 1-1 pegged to Singapore dollar and US dollar. These are the XSGD and XUSD.

XSGD is currently issued out of Xfers and is available for minting and redemption via the StraitsX platform, while XUSD will be released publicly in the near future. In line with the MAS’ upcoming SCS regulatory framework requirements, the design and characteristics of SCS to be issued by StraitsX will be bound by the following key requirements.

Value stabilizing mechanism – SCS issued by the company will be pegged 1:1 to their respective underlying currencies, with reserve assets held either in cash or debt securities issued by the MAS, the US Department of the Treasury, or bonds held under an overnight reserve repurchase agreement. Reserve assets will be maintained at a level that is equal to at least 100% of the outstanding SCS in circulation.

Reserve assets will be subject to independent external audits twice a month, with the assurance reports issued by a certified public accountant in Singapore, through a process in accordance with the Institute of Chartered Accountants standards. The assurance reports will certify that the reserve assets meet regulatory requirements and will be publicly available on the company’s website.

Segregation, custody of reserve assets – The company’s SCS issuing entities maintains the practice of depositing the reserve assets in custody amount held on trust for the holders of its stablecoins, which is separate from the corporate assets of the company. The custody account will be maintained with a financial institution that is licensed or regulated by the MAS to provide custodial services.

Redemption mechanism – A holder of the company-issued SCS will always have the right to redeem the value of the SCS in equivalent pegged fiat currency, directly with the company or appointed distributors. Holders will be able to initiate withdrawal of the fiat currency from his or her company account to his or her whitelisted beneficiary bank account within five business days from the time of a legitimate redemption request.

Prudential requirements  – The company’s SCS issuing entities will maintain a base capital at all times of at least the higher of SG$1 million, or 50% of its annual operating expenses. The base capital will be maintained in liquid assets valued at higher of the 50% of its annual operating expenses or an amount assessed by an external auditor on an annual basis to be necessary in the event of recovery or orderly winding up of the company.

The company’s receipt of the IPA from the MAS signifies a huge step forward, the company says, for the future of regulated, transparent and trusted stablecoins.

In addition, it argues, the IPA also “underscores the company’s strong reputation as a responsible digital assets service provider, and a testament to XSGD’s track record and contributions to the emerging global financial system with over 7.7 billion XSGD transacted on-chain since October 2020.”

The company, it states, “sees potential in single-currency pegged stablecoins as a credible and reliable medium to facilitate innovations in payment transactions both domestically and across borders, delivering greater value-added payment services to users and other stakeholders.”

Mildred Chua
Mildred Chua
managing director and group head of syndicated finance
In-person roundtable
Finding opportunity amid volatility
View Highlights
Maxime Perrin
Maxime Perrin
head of sustainable investment
Lombard Odier Investment Managers
Sustainable investing - the new market standard
View Highlights