- DBS Group Holdings Ltd. partners with Paxos to offer Singapore’s stablecoin custody and cash management services.
- Paxos recently received a license from the Monetary Authority of Singapore to issue stablecoins.
- Stablecoins are pegged 1-1 to major currencies and are primarily used for crypto trading and lending.
DBS Group Holdings Ltd., Singapore’s largest bank, is deepening its foray into the digital asset sector by offering custody services for stablecoin reserves in partnership with Paxos Trust Co. This move marks a significant step for both DBS and the broader adoption of stablecoins in the regulated financial landscape.
According to the Bloomberg report, this partnership signals DBS’s greater interest in the digital asset space following Paxos’ recent receipt of a license from the Monetary Authority of Singapore. Evy Theunis, head of digital assets at DBS’s institutional banking group, highlighted the bank’s commitment to regulatory compliance in this endeavor.
Singapore aims to leverage blockchain technology to strengthen its position as a global financial hub. Proponents argue that stablecoins can streamline payments, making them more accessible, faster, and cheaper, although this claim remains to be proven at scale.
Stablecoins are pegged 1:1 to major currencies and backed by reserves such as cash and bonds. Currently, they are primarily used within crypto trading and can be utilized for interest. Approximately $162 billion worth of stablecoins are in circulation, with Tether Holdings Ltd.’s USDT holding a 70% market share, followed by Circle Internet Financial Ltd.’s USDC with a 20% share. Paxos issues USDP, and PayPal Holdings Inc. recently launched PYUSD.
Past events, such as the $40 billion collapse of TerraUSD, underscore the risks associated with stablecoins. This incident particularly impacted Singapore, where Terraform Labs founder Do Kwon was based. Numerous jurisdictions, including Singapore, Dubai, Hong Kong, Japan, and Europe, have implemented digital asset regulations to protect investors and promote innovation. Both Paxos and Circle have obtained licenses to operate in Singapore under the city-state’s strict stablecoin rules, which mandate capital, reserve, and disclosure requirements.
Moreover, Paxos intends to issue US dollar-based tokens in Singapore. Cantor Fitzgerald LP acts as a custodian for Tether, while Bank of New York Mellon serves this role for Circle in the US. Paxos may use institutions such as BMO Harris Bank NA, State Street Bank & Trust Co., and Customers Bank.
Many crypto companies have struggled historically to access banking services due to the industry’s volatility and past scandals. However, the evolving regulatory landscape and the potential for profits from reserve management, fueled by higher global interest rates, have led to improved prospects.
By working with stablecoin firms, banks can diversify their offerings while managing the inherent risks of cryptocurrencies. Grace Chong, head of the financial regulatory practice at Drew and Napier LLC in Singapore, emphasized this point.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
