Paxos has received full approval from the Monetary Authority of Singapore (MAS) to issue stablecoins under the regulator's upcoming stablecoin framework.
This approval allows Paxos provide digital payment token services through its entity, Paxos Digital Singapore Pte. SL.As the Principal Payment Institution.
With this approval, Singapore joins the US and the United Arab Emirates as markets where Paxos can issue stablecoins as the company works to expand its global footprint.
Paxos has selected DBS Bank, Southeast Asia's largest bank by assets, as its lead banking partner for cash management and custody of stablecoin reserves.
Walter Hessert
Walter Hessert, Head of Strategy at Paxos, said:
“A stable coin issued under the standards set by a regulator like MAS – known for its strict regulatory standards – is an important step towards democratizing access to commerce and financial services.
Receiving approval from MAS is an important step for Paxos and our global business partners to provide secure access to the US dollar to more users around the world.”
Evy Theunis
Evy Theunis, Head of Digital Assets, Institutional Banking Group at DBS Bankhe said
“We believe that trust and security are key to the adoption of stablecoins. By examining all the important aspects involved in managing reserve assets, stablecoin issuers will find that our solutions will help them meet the strong standards that regulators and customers expect of them.
This partnership furthers DBS's broad involvement in the digital asset ecosystem, where we have been pioneers and innovators for several years now.”
This development follows the previous one advertisement In November 2023, Paxos, together with StraitsX, received In-Principle Approvals (IPA) from MAS to issue stablecoins.
Stablecoins, including StraitsX's XSGD and XUSD, pegged to the Singapore dollar and the US dollar respectively, and Paxos' US dollar-backed stablecoins, will become “MAS regulated stablecoins” following the legislative changes.
According to the stablecoin regulatory framework proposed by MAS, these stablecoins must meet strict requirements. These include the Value Stabilization Mechanism, securing each stablecoin with at least 100% of the stablecoin's reserve asset backing.
Furthermore, these assets will undergo independent audits every two months, with reports available on the companies' websites, and will be separate from corporate assets, held by a financial institution regulated by the MAS.
The framework also includes a redemption mechanism that guarantees holders the right to exchange their stablecoins for equivalent fiat currency within five business days of a legitimate request.
In addition, companies must maintain a basic capital, assessed annually, to ensure sufficient liquidity to resume operations or to close in an orderly manner.
