Singapore is doubling down on efforts to become a haven for crypto-hodlers

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(Kitco News) – The Monetary Authority of Singapore (MAS), the city-state’s central bank, has granted stablecoin issuers Circle and Paxos approval for licenses to operate in the region.

A press release from Circle, the issuer of USD Coin (USDC), indicates that MAS has granted the firm an in-principle approval as a major payment institution licensee, allowing it to issue cryptocurrencies and facilitate domestic and cross-border payments.

The announcement by Paxos, which issues the Pax Dollar (USDP), indicates that it has received a license to provide digital payment token services under the Payment Services Act of 2019.

Both firms revealed their new approvals on November 2, a week after MAS published a pair of consultation documents proposing regulatory measures to reduce the risk of consumer harm from cryptocurrency trading and to support the development of stablecoins as a credible medium of exchange in the digital asset ecosystem.

Thanks to their new licenses, both Circle and Paxos will now be able to offer stablecoin services and other digital payment token products in Singapore.

“This milestone enables us to work with all relevant stakeholders and demonstrate the potential of digital currencies, open payment systems and innovation-enhancing fintech regulations to drive economic growth and strengthen Singapore’s position as a global hub for digital assets,” said Dante Disparte, Circle’s Chief Strategy Officer and Global Head of Public Policy.

Paxos Asia CEO Rich Teo also expressed his excitement about the new license, saying “We are delighted to have MAS as our regulator and with their oversight we will be able to confidently accelerate consumer adoption of digital assets globally in partnership with the world’s largest enterprises .”

The newly issued licenses come as Singapore fights to regain its title as one of the more crypto-friendly countries.

Where CeFi and DeFi combine

In other developments from Singapore, DBS Bank has begun integrating decentralized finance (DeFi) applications into its markets with the launch of a foreign exchange (FX) and government securities trading test that used permitted (private) DeFi liquidity pools.

The new test is part of Project Guardian, a cross-industry collaboration developed by MAS to explore the tokenization of traditional assets. The test involved tokenized versions of Singapore government securities (SGS), Singapore dollars (SGD), Japanese government bonds and Japanese yen (JPY).

The trial was conducted on the Polygon network, in conjunction with DeFi lending platform Aave and decentralized exchange and automated market maker (AMM) Uniswap.

“We wanted to show that it was possible to tokenize government securities and cash in a DeFi liquidity pool,” said Han Kwee Juan, group head of strategy and planning at DBS. “So by using an AMM, and solving for it with price oracles and market data streaming services from Bloomberg or Refinitiv, we wanted to create an institutional-grade DeFi venue that regulators would be comfortable with.”

The project has shown that trading on a private DeFi protocol enables simultaneous operations with instant trading, settlement, clearing and custody. Going forward, the initiative has the potential to transform the existing trading processes by providing better liquidity across multiple financial assets and markets, DBS said.