The in-principle approval granted by the Monetary Authority of Singapore positions Paxos to offer digital payment token services, marking a significant step towards establishing a foothold in the Singaporean market.
Blockchain infrastructure firm Paxos has announced plans to issue a US dollar-backed stablecoin for its customers in Singapore.
The initiative comes after Paxos reportedly received preliminary approval from the Monetary Authority of Singapore (MAS), paving the way for the establishment of Paxos Digital Singapore Pte. Ltd. This entity will operate under the Payments Services Act (PSA) while awaiting full regulatory approval to conduct business in Singapore.
The Initial Approval and Road Ahead for Paxos
The in-principle approval granted by the Monetary Authority of Singapore positions Paxos to offer digital payment token services, marking a significant step towards establishing a foothold in the Singaporean market. The regulatory green light provides an opportunity for Paxos to engage with customers under the PSA, demonstrating a commitment to compliance while awaiting full approval.
Upon receiving the anticipated full approval, Paxos plans to collaborate with enterprise clients to issue a US dollar-backed stablecoin. This move aligns with the increasing global demand for the US dollar, addressing challenges faced by consumers outside the United States in accessing dollars securely and reliably while adhering to regulatory protections.
“Global demand for the US dollar has never been stronger, yet it remains difficult for consumers outside the US to get dollars safely, reliably, and under regulatory protections,” said Paxos Head of Strategy Walter Hessert in a statement.
It is worth mentioning that the announcement comes just over a year after Paxos was granted an operating license in the Southeast Asian country, allowing it to provide tokenization, custody, and trade services under the same bill as per Wednesday’s announcement.
Paxos is known for its commitment to transparency, evident in its practice of publishing monthly attestations and reserve reports for its stablecoins. This commitment to openness not only builds trust but also sets a benchmark for regulatory compliance in the cryptocurrency space.
Stablecoin Market Growth
Paxos’ decision to delve into stablecoins aligns with the burgeoning growth of this market segment. According to brokerage firm Bernstein, the stablecoin market is projected to witness substantial growth, soaring from $125 billion to an estimated $2.8 trillion over the next five years. This expansion signifies a rising demand for stable digital currencies, and Paxos is poised to capitalize on this trend.
Analysts, including Gautam Chhugani, predict that major global financial and consumer platforms will play a pivotal role in the stablecoin market’s growth.
The concept of co-branded stablecoins, closely linked to these platforms, is expected to facilitate seamless transactions and enhance user engagement within their ecosystems. This integration is seen as a key driver for the mass adoption of stablecoins beyond specialized crypto platforms.
Aside from the US dollar, the stablecoin market is seeing developments in other currencies. Circle’s European Union strategy and policy director, Patrick Hansen, highlighted the potential growth of the euro stablecoin market. Remarkably, Circle, a well-known crypto player, currently has one of the top five Euro-pegged stablecoins, the Euro Coin (EUROC).