Paxos, a blockchain infrastructure company, has announced plans to launch a US dollar-backed stablecoin for its Singapore customers. They have received preliminary approval from the Monetary Authority of Singapore (MAS), clearing the way for the formation of Paxos Digital Singapore Pte. Ltd. While waiting for full regulatory approval to conduct business in Singapore, this entity will operate under the Payments Services Act (PSA).

Initial Approval by MAS

The Monetary Authority of Singapore’s in-principle approval allows Paxos to offer digital payment token services, a significant step toward establishing its presence in the Singaporean market. The regulatory green light allows Paxos to engage with customers under the PSA, showing compliance while waiting for full approval.

Paxos intends to collaborate with enterprise clients to issue a US dollar-backed stablecoin once full approval is received. This move aligns with increasing worldwide demand for the US dollar, addressing difficulties encountered by consumers outside the US in gaining secure and reliable access to dollars while following regulatory safeguards.

“Global demand for the US dollar has never been stronger, yet it remains difficult for consumers outside the US to get dollars safely, reliably, and under regulatory protections,” Paxos Head of Strategy Walter Hessert said in a statement.

It is worth noting that the announcement arrived just over a year after Paxos received an operating license in the Southeast Asian country, which allows it to provide tokenization, custody, and trade services beneath the same bill as announced on Wednesday.

Market Development for Stablecoins

Paxos’ decision to invest in stablecoins coincides with the market segment’s rapid growth. According to brokerage firm Bernstein, the stablecoin market will grow significantly over the next five years, rising from $125 billion to an estimated $2.8 trillion. This growth indicates a growing demand for stable digital currencies, and Paxos is well-positioned to capitalize on this trend. 

Co-branded stablecoins, which are closely linked to these platforms, are expected to facilitate seamless transactions and boost user engagement within their ecosystems. This integration is seen as a key driver of stablecoin mass adoption beyond specialized crypto platforms.

Paxos’s Regulatory Compliance and History

PayPal launched the PYUSD stablecoin in August, which is backed by the US dollar and issued by Paxos. Binance previously collaborated with Paxos to develop its BUSD stablecoin; however, Paxos ceased BUSD issuance in response to a New York Department of Financial Services order.

Paxos is well-known for its commitment to transparency, as evidenced by the publication of monthly attestations and reserve reports for its stablecoins. This commitment to transparency not only fosters trust but also serves as a model for regulatory compliance in the field of cryptocurrency.

Meanwhile, the company’s new Singapore entity is Paxos’s second regulated firm in Singapore. In the previous year, the initial entity obtained a license from MAS, allowing it to provide digital payment token services according to the Payment Services Act 2019. This license facilitated the onboarding of Singapore-based customers onto Paxos’ crypto brokerage platform, allowing them to participate in various cryptocurrency activities.

Conclusion

Paxos’ entry into Singapore with a US dollar-backed stablecoin solidifies the company’s position as a leading provider of stablecoin solutions. The company’s dedication to regulatory compliance and ability to meet global demand for stablecoins position it well for long-term success in the rapidly changing cryptocurrency market. Paxos should continue to invest in innovative stablecoin solutions and explore partnerships with key players in the Asia-Pacific region to strengthen its competitive position. Paxos can solidify its position as a dominant force in the stablecoin market by expanding its product offerings and enhancing strategic alliances.