StraitsX Insights

StraitsX Insights #2: Growth of Digital Assets Investments & Stablecoin Usage in Corporate Treasuries

April 14, 2022

Key takeaways

Stablecoins offer corporate treasuries:

  • Safe exposure to digital assets
  • Yield generation via liquidity provision

Digital assets offer corporate treasuries: 

  • Full control & ownership
  • Faster settlement times
  • Lower transaction fees
  • Lower settlement risks
  • Higher uptime

Corporate treasuries are diversifying their investments with digital assets, as inflation skyrockets up to 3.5% in 2022 according to Singapore’s Monetary Authority of Singapore (MAS). It is the same story in other regions like the United States and United Kingdom, where inflation rates jump up to 7%. 

To combat this, tech companies such as Tesla, MicroStrategy, Square, and many others have diversified their investments with digital assets such as cryptocurrencies and stablecoins.

Whilst cryptocurrencies have their place within investments, it is not advisable to go all-in due to its innate volatility. It is also not useful as a way of making payments. This is where stablecoins come in, where they can help balance out a corporate treasury’s portfolio by offering an anchor of sorts, and a mode of transacting within the digital assets space.

What is a stablecoin?

Stablecoins are digital assets whose values are pegged to another asset. There are four types of stablecoins:

  • Fiat-collateralised stablecoins
  • Commodity-collateralised stablecoins
  • Cryptocurrency-collateralised stablecoins
  • Algorithmic stablecoins

These coins seek to achieve value stability by tying the coin’s value to the above-mentioned assets. In the case of XSGD and XIDR, they are fiat-collateralised stablecoins that are exchangeable on a 1:1 ratio with the Singapore Dollar and the Indonesian Rupiah. Each XSGD and XIDR has its fiat equivalent safeguarded in a regulated financial institution.

Exposure to digital assets

Corporate treasuries looking to diversify their investments should look towards digital assets. Digital assets can provide a long-term hedge against inflation, where large cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) could provide high returns. However, it is inadvisable for corporate treasuries to allocate all their resources within such cryptocurrencies. Stablecoins such as XSGD and XIDR can be used to balance out a corporate treasury’s portfolio by adding a stable store of value that is liquid.

Full ownership of digital assets

Corporate treasuries can have full ownership and custody of their digital assets. This includes popular digital assets such as Bitcoin or Ethereum, stablecoins such as XSGD or XIDR, or even non-fungible tokens (NFTs). For them to have full ownership, corporate treasuries can sign up for a non-custodial wallet via our partners. While our partners provide the tools, full ownership is handed to corporate treasuries by way of private keys and recovery seed phrases.

Secure storage

Corporate treasuries can take their digital assets offline with a non-custodial wallet. These wallets come with a recovery seed phrase that is either 12-, 18-, or 24-words long. These recovery seed phrases can be stored on seed capsules, safe deposit boxes, or memory devices that are not connected to the internet. Corporate treasuries can opt for a combination of the above-mentioned storage methods to scatter their recovery seed phrases. This prevents malicious actors from easily accessing your funds. 

Faster transactions

Stablecoins also give corporate treasuries increased agility because of faster transaction times. Where typical Forex market transactions take around two business days, digital asset investments only take minutes. On the Ethereum and Zilliqa blockchain, transactions typically take 6 minutes and 40 seconds at most, respectively.

Lower transaction fees

Corporate treasuries can take advantage of borderless and seamless digital payments via StraitsX Payment & Payout APIs

The StraitsX Payment APIs allow corporate treasuries to receive and automatically reconcile payments in fiat and stablecoins. This would streamline the cash management process, increase transaction speeds, and lower the costs of transaction fees incurred by middlemen. 

Reduction in settlement risks 

Corporate treasuries can also reduce settlement risks because transactions on the blockchain are immutable and irreversible by nature. In the case of XSGD and XIDR, corporate treasuries can view transactions on Etherscan. Here, they can check the status of their transactions, who received the stablecoins, who is transferring the stablecoins, and even view the smart contracts that these stablecoins are based on.

Higher uptime

Devices on the blockchain are always-on for 24-hour, 7-days a week, unlike traditional markets which operate on a 24-hour, 5-day a week schedule.

Liquidity provision 

Corporate treasuries can provide liquidity with XSGD and XIDR on our partners’ DeFi protocols. With a StraitsX Business Account, corporate treasuries can mint XSGD or XIDR to pool on these DeFi protocols.

Pooling XSGD and XIDR would require a digital assets wallet. Those who wish to participate in our partners’ DeFi protocols may create a digital assets wallet with our wallets and custody solutions. Corporate treasuries that provide liquidity can earn attractive yields of up to 15 percent APR.

How can corporate treasuries start investing with stablecoins?

The StraitsX Ecosystem is well-equipped to provide corporate treasuries with tools for stablecoin usage. 

Corporate treasuries can sign up for a StraitsX Business Account, where they can mint, swap, and redeem XSGD or XIDR with other stablecoins in our ecosystem.

  1. Sign up for a StraitsX Business Account.
  2. Upload the required documents to verify your identity.
  3. Make a Transfer In from your bank account to mint XSGD or XIDR.
  4. Create your own non-custodial wallet with our partners to transfer out your XSGD or XIDR
  5. Connect your wallet with our DeFi partners: DFX, Uniswap, and Zilswap to swap for other digital assets.
  6. Alternatively, get rewarded by providing liquidity with XSGD or XIDR

Note: If you are a high net worth individual, or institution, you can take advantage of StraitsX’s OTC Desk feature that offers deep liquidity and OTC block trades.

Ready to get started?

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