As issuers of stablecoins, trust and security remain steadfast in our processes. With the growing adoption of stablecoins, the need for regulatory oversight and mechanisms to address fraudulent activities or misconduct has also become increasingly apparent.
Stablecoins, both domestically and abroad, are poised to continue bridging the gap between traditional finance and blockchain technology. With a stable value unlike other volatile cryptocurrencies, stablecoins such as XSGD and XIDR; beyond trading, can help to revolutionise various everyday use cases including remittances, payments, or even as a store of value.
While stablecoins offer numerous advantages, they are also not immune to misuse or fraudulent activities. This is where our repossession of a user’s funds becomes essential, and may come into play. Today, like most other major, trusted stablecoin issuers globally, StraitsX is able to support a ‘clawback’ functionality for stablecoin assets issued across the Ethereum, Polygon, Hedera, and Zilliqa blockchains. The ability to support ‘clawback’ functionality (ie. as seen with blockchains such as the XRP Ledger) is also a primary consideration when selecting new chains to build on StraitsX stablecoins’ multichain support. Here are some key justifications for why a ‘clawback’ functionality is essential:
Repossession rights empower stablecoin issuers like us to take action against users engaged in fraudulent activities. This includes activities such as money laundering, financing of illegal activities, or any other form of illegal transactions. By having the authority to freeze or repossess funds, we can help prevent our stablecoins from being used for unlawful purposes
Stablecoin regulations are evolving globally, and it becomes increasingly paramount for us to adhere to new frameworks in order to maintain operations. As with traditional financial institutions, repossession rights provide stablecoin issuers with a mechanism to enforce compliance with relevant laws and regulations, thereby reducing the risk of regulatory backlash and potential legal consequences.
We remain focused on protecting you, the valued StraitsX customer. Repossession rights can only help us continue to protect legitimate users of our stablecoins. In the event of a security breach, hack, or unauthorised access to user accounts, StraitsX can quickly freeze or recover affected funds.
The very essence of a stablecoin lies in its ability to maintain price stability. Misuse or fraudulent activities can potentially disrupt this stability, leading to market uncertainty. Repossession rights allow us to take corrective actions promptly, preserving the trust and stability of XSGD and XIDR.
In order to ensure the integrity and security of our stablecoins, and to protect the interests of legitimate stablecoin usage, StraitsX will continue to adopt a strong stance towards taking the appropriate actions against fraudulent behaviour. These include, among other things, initiating the repossession process, suspension of accounts, or redistribution of stablecoin assets.
That said, these actions will only be taken where a directive has been provided by regulatory bodies to take action against fraudulent behaviour.
StraitsX may be informed of potential fraudulent activities through several sources, including but not limited to banks, The Singapore Police Force, and self-reporting via our Customer Service and Compliance teams.
Our Customer Service team provides a first line of defence by screening queries and requests through the threshold rules, determining if there are any early indications of suspicious activity. Our Compliance team then follows up with this alert to check if any rules have been broken. In the event rules have been breached, local law enforcement agencies such as the Singapore Police Force will be alerted, and step in.
Aside from taking a pre-emptive approach to crime prevention, fellow financial institutions may also reach out to StraitsX for cooperation in some cases.
Our commitment to fighting fraudulent activities has always been one of our top priorities. Previously known as Xfers, we have been recognised by the Singapore Police Force and the Ministry of Home Affairs for our efforts against cybercrime, money laundering and scam prevention.
We received our first award in 2018, for stopping cybercrime involving six victims. One of the victims managed to recover approximately S$40,000 with the help of Xfers and the Singapore Police Force. In 2020, we received a second award for stopping cybercrime involving one victim, managing to help a user recover over S$14,500.
Since then, we have also received an Outstanding Community Partnership Award in 2021, and a Minister of Home Affairs National Day Award in 2022 for our commitment to ensuring our users’ safety and security, as well as maintaining our relationships with lawmakers and law enforcers.
In an ever-evolving stablecoin landscape, StraitsX promises to strike a delicate balance between providing innovative financial services while ensuring regulatory compliance and security. The right to repossess stablecoin assets will serve to empower issuers like us to combat fraudulent activities, safeguard our users, and maintain the stability of our stablecoins. In an increasingly complex stablecoin landscape, regulatory oversight and responsible practices will be essential to building a sustainable and trustworthy stablecoin ecosystem.