The issuer of SGD stablecoin, XSGD, is bullish on the market for stablecoins not pegged to the US dollar.
XSGD is a stablecoin tied to Singapore’s dollar and is regulated below the nation’s payment services act as e-money. StraitsX sees international demand for the XSGD, however, will Singapore’s coverage of non-internationalization of the Singapore dollar stymie efforts?
Stablecoins are approaching a market cap of nearly $135 billion, with daily trading volume close to $75 billion. Whereas Tether dominates the ranks as the highest issuer, its opponents such as USDC, Binance’s BUSD, DAI, all have one thing in common: their stablecoins are issued in US dollars.
Per CoinGecko’s market dominance data, USD-denominated stablecoins make up about 98% of all of the stablecoin quantity. It is a heavier weighting than the USD’s function in worldwide fiat markets the place, in accordance with Bank of International Settlement data, the dollar appears 88% of the time on both facets of a transaction. You want to dig deep down the checklist to discover a non USD issued stablecoin; for an industry that prides itself on decentralization, stablecoins are sure centralized around one fiat currency — way more so than the real-life counterparts they are pegged against.
But Aymeric Salley, the founder of StraitsX, which issues XSGD, a Singapore dollar-based stablecoin, doesn’t think it always needs to be like this. In an interview with Blockworks, he mentioned that this isn’t for lack of demand but rather lack of alternatives.
“StraitsX doesn’t imagine that this present state is consultant of the market demand however quite the consequence of a lack of trusted and compliant alternatives denominated in different native fiat currencies,” he said.
“We imagine that many different stablecoins denominated in lots of fiat currencies will emerge, and USD will finally only symbolize 50% or less of the whole stablecoin value in circulation.”
Whereas Singapore has a policy of discouraging the internationalization of the SGD with a purpose to hold its worth reflective of its economy, there’s one very particular advantage that XSGD has, which could result in its broad worldwide adoption: Singapore’s e-licensing framework.
Salley defined that XSGD is licensed under the Singapore Payment Services Act, a framework that defines and licenses digitized money. The Act defines digitized money — e-money in its taxonomy — as a digital representation of the one fiat forex, which encompasses the monetary value of the fiat currency. Below their license, StraitsX can mint XSGD digital tokens, with a local bank taking full liability for the cash collateralizing the stablecoin.
It is a huge distinction to the US the place stablecoin laws are vague and unclear, and the largest stablecoin issuer, Tether, is infrequent in battle with regulators due to the uncertainty of its reserves.
There’s appreciable debate amongst authorized consultants that under US securities laws, some stablecoins would symbolize securities whereas others can be thought-about cash transmitters.
Inside Washington, there’s a proposal working its manner across the White Home to regulate stablecoins via bank constitution. But internally it’s also inflicting significant debate, the Wall Street Journal reports, over the precise regulatory device used to handle the issue. On one facet is the Financial Stability Oversight Council, which would designate stablecoin actions as systemically vital and require more stringent threat management rules to be put in place.
However the Journal says this isn’t President Biden’s preferred approach as sources say it would be cumbersome, and the President prefers the bank charter route. That was the path being pushed by proponents of the STABLE Act, the first legislative proposal to cope with stablecoins.
A current report from Bloomberg also hinted that an SEC crackdown on stablecoins is coming — bolstering the argument that these would be considered securities.
All the while, XSGD — backed by Singapore’s clear, crisp framework for stablecoins — is seeing its volume rise. As of last month, XSGD crossed over 1.5 billion SGD in an on-chain transaction value, Salley mentioned, and it’s now listed on CEX.IO, Uniswap as well as 1inch. Its obtainable trading pairs are additionally increasing, with the Indonesian exchange Indodax now listing one.
Though the XSGD has a legal green light to function, there’s the lingering question as to how much it will probably develop. No forex in the world has achieved internationalization just like the dollar, so why would a non-USD digital token equal be ready for world domination?
Source: Blockworks
