The cryptocurrency infrastructure company Paxos has achieved a significant milestone in Singapore by securing in-principle approval from the Monetary Authority of Singapore (MAS) for Paxos Digital Singapore Pte. Ltd., a new entity. This approval paves the way for Paxos to offer digital payment token services and launch a U.S. dollar-backed stablecoin in Singapore.
The stablecoin will comply with MAS’ proposed regulations for stablecoins, which specifically target non-bank issued tokens pegged to the value of major currencies like the Singapore dollar, Euro, British Pound, and U.S. Dollar, particularly those with a circulation exceeding 5 million Singapore dollars (approximately $3.7 million).
Upon receiving full approval, Paxos plans to partner with enterprise clients to issue the stablecoin in Singapore. Walter Hessert, the head of strategy at Paxos, emphasized the strong global demand for the U.S. dollar and the challenges consumers outside the U.S. face in accessing it safely and reliably. The approval by MAS will enable Paxos to expand its regulated platform globally, providing a more accessible means for international users to obtain U.S. dollars.
@MAS_sg has announced the features of a new regulatory framework that seeks to ensure a high degree of value stability for #stablecoins regulated in #Singapore. https://t.co/j12QambGIJ pic.twitter.com/LBUoOGY16P
— MAS (@MAS_sg) August 15, 2023
Paxos has a history of involvement in stablecoin issuance. It played a key role in launching PayPal’s USD-backed stablecoin, PYUSD, on August 7. However, the company also faced regulatory challenges in the past. Notably, Paxos was responsible for minting Binance’s now-defunct BUSD stablecoin, but was directed by the New York Department of Financial Services to stop issuing the token after it was declared an unregistered security.
To maintain compliance and transparency, Paxos has asserted that all its stablecoins are fully backed by the U.S. dollar and cash equivalents. The company issues monthly attestations and reserve reports to ensure adherence to regulatory standards and to maintain trust in its stablecoin offerings.
The move by Paxos in Singapore is a significant development in the stablecoin market, reflecting a growing interest in regulated, fiat-backed digital currencies. The regulatory framework established by MAS for stablecoins indicates a progressive approach towards integrating digital currencies into the mainstream financial system while ensuring consumer protection and financial stability. Paxos’ venture into this regulated environment marks an important step in the evolution of stablecoins as a credible and reliable form of digital currency.
