Circle and Paxos are approved, Singapore's new stablecoin landscape: Eastern and Western issuers compete for the S$2.6 billion blue ocean

• The Monetary Authority of Singapore (MAS) has issued "Major Issuer of Digital Payment Tokens (DPT)" licenses to six issuers , among which Circle and Paxos are the first foreign companies to obtain "full issuer licenses".

• The issuance of the Singapore dollar-denominated stablecoin XSGD increased 2.6 times to 2.36 billion in 12 months; during the same period, the newly launched StraitsX USD (XUSD) and USDC-SGD liquidity pool increased the depth of on-chain exchange.

• The PSA stablecoin framework requires 100% high-liquidity asset reserves + monthly audits , and capital ≥ S$5 million; anti-money laundering/anti-terrorism requirements are benchmarked against local banking standards.

1️⃣ Policy review: from sandbox to formal framework

• 2020 Q4 : MAS pilots the “E-money Token” concept in Sandbox Express.

• August 2023 : Public consultation on the “Consultation Draft on Stablecoin Issuance and Cross-border Transactions”.

• January 15, 2024 : The revised Payment Services Act comes into effect, and the details of stablecoin issuance are included in the schedule.

• July 2024 : First licensing window opens; licensees have until January 2025 to achieve incremental compliance.

2️⃣ License list: 6 license holders and track distribution

3️⃣ Framework hard indicators: the first "dual currency" reserve model

1. 100% collateral of legal assets : USD or SGD reserves must be deposited in insured banks or short-term government bonds.

2. Transparency : Monthly third-party audits, reports made public within 5 working days.

3. Capital adequacy : Net capital ≥ 2% of reserves and not less than S$5 million.

4. Redemption channel : 1:1 redemption must be supported on working days T+0, with a maximum handling fee of 0.2%.

5. Cross-border guidelines : Cooperation with overseas VASPs requires sharing of on-chain address risk scores.

4️⃣ Market impact: liquidity, fees and DeFi ecosystem

• On-chain depth : The 30-day average depth of the Uniswap XSGD/USDC pool increased by 180%.

• Fee reduction : The total cost of cross-border exchange in Southeast Asia (SG ↔️ IDR) has dropped from 1.45% to 0.85%, and Circle's cross-partner API facilitates instant currency exchange.

• Strategic cooperation : Grab and StraitsX have opened up stablecoin payments, and the number of users has exceeded 1.2 million in 3 months.

• DeFi spillover : The annualized incentive for the Singapore dollar stablecoin pair on SushiSwap is 9-12%, attracting arbitrage funds from the United States and Europe.

5️⃣ Regional and global competition

6️⃣ Risks and prospects

• Bank channel dependence : If the US dollar clearing bank tightens, it will create vulnerability for USDC redemption.

• Regulatory arbitrage : It is still difficult to prevent unlicensed cross-border issuers from "bypassing" Singapore users through on-chain liquidity pools.

• Technology concentration : Most issuers use Fireblocks MPC for hosting, and potential single points of failure need to be dispersed.

• Web3 Pay explodes : We are optimistic about the launch of the first batch of BNPL (buy now, pay later) solutions based on stablecoins in 2026.

🔚 Conclusion

The "dual-currency, dual-track" Singapore model has set a benchmark for Asian stablecoins that balances fund transparency and compliance operations. The entry of Circle and Paxos not only brings U.S. dollar liquidity, but also forces local XSGD to improve on-chain use cases. In the future, whoever can take the lead in expanding the SGD scenario and reducing payment friction will be able to take the lead in the digital payment landscape worth SGD 26 billion.