StraitsX receives In-Principle Approval from the Monetary Authority of Singapore to issue Single-Currency pegged Stablecoins

November 16, 2023

StraitsX has received In-Principle Approval (IPA) from the Monetary Authority of Singapore (MAS) as Major Payment Institutions licensed for digital payment token services, for the purpose of issuing XSGD (out of StraitsX SGD Issuance Pte. Ltd.) and XUSD (out of StraitsX USD Issuance Pte. Ltd.) respectively. XSGD and XUSD are Single-currency pegged stablecoins (SCS) that are 1-1 pegged to Singapore Dollars and US Dollars respectively. The in-principle approval from MAS as a Major Payment Institution licence holder for digital payment token services allows StraitsX to issue stablecoins that are intended to be substantively compliant with MAS’ upcoming stablecoin regulatory framework. 

XSGD is currently issued out of Xfers Pte. Ltd. and is available for minting and redemption via the StraitsX platform, Southeast Asia's pioneering digital assets platform based in Singapore. XUSD will be released publicly in the near future. In line with 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 Stabilising Mechanism: SCS issued by StraitsX 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 U.S. Department of the Treasury, or bonds held under an overnight reverse 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 (ISCA) standards. The assurance reports will certify that the reserve assets meet regulatory requirements and will be publicly available on the StraitsX website.
  • Segregation and Custody of Reserve Assets:  StraitsX’s SCS issuing entities maintains the practice of depositing the Reserve Assets in custody amount held on trust for the holders of its stablecoin(s), which is separate from the corporate assets of StraitsX. The custody account will be maintained with a financial institution that is licensed or regulated by MAS to provide custodial services.

  • Redemption Mechanism: A holder of StraitsX-issued SCS will always have the right to redeem the value of the SCS in equivalent pegged fiat currency, directly with StraitsX and/or appointed distributor(s). Holders will be able to initiate withdrawal of the fiat currency from his/her StraitsX account to his/her whitelisted beneficiary bank account within 5 business days from the time of a legitimate redemption request.

  • Prudential Requirements: StraitsX’s SCS issuing entities will maintain a base capital at all times of at least the higher of SGD 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 StraitsX.

StraitsX’s receipt of the IPA from MAS signifies a huge step forward for the future of regulated, transparent, and trusted stablecoins. In addition, it also underscores StraitsX’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. 

StraitsX 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. The IPA also marks a progressive and participatory approach that MAS has adopted to ensure that the upcoming stablecoin legislation would be relevant, fit for purpose, and achieves the objective of developing credible and reliable stablecoins that facilitate digital transactions. StraitsX will continue to develop alongside the MAS’ stablecoin framework to achieve the objective of being fully compliant with the eventual framework and will continuously engage MAS and other industry players to right-size the final legislation.   

“We are deeply honoured to be among the first to be recognised by the MAS as being substantively compliant with the requirements of the upcoming stablecoin framework, in advance of the legislative framework coming into force, and will remain committed to being transparent and trusted by our customers. In tandem with the Major Payment Institution licence, we are confident in advancing the future of digital finance and payment infrastructures in this region. Beyond XSGD, StraitsX intends to fully maintain the same high degree of value stability for future stablecoins we may issue, such as XUSD, allowing for timely redemption for our users, and for StraitsX to continue upholding strong prudential standards.” said Kenny Chan, Head of StraitsX.

The nod from MAS also builds on StraitsX’s continued momentum in introducing the next phase of payment solutions. StraitsX recently collaborated with other industry partners on piloting the use of XSGD-backed Purpose Bound Money payments, across use cases such as programmable rewards and escrow specifications for online commerce.  Purpose Bound Money is a concept first introduced by MAS as part of Project Orchid, which enables special conditions and business logic to be specified when making transfers in digital money.

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