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Singapore doubles down on its 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 the MAS has granted the firm an in-principal approval as a major payments institution license holder, which allows it to issue cryptocurrencies and facilitate domestic and cross-border payments. 

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

Both firms revealed their new approvals on Nov. 2, one week after the MAS published a pair of consultation papers that proposed 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 within Singapore. 

“This milestone enables us to work with all relevant stakeholders and demonstrate the potential of digital currencies, open payment systems and innovation-forward 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 likewise expressed his excitement about the new license, saying “We’re excited to have MAS as our regulator, and with their oversight, we’ll be able to safely accelerate consumer adoption of digital assets globally in partnership with the world’s biggest enterprises.”

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

Singapore's largest bank launches a self-directed crypto desk for accredited investors

Where CeFi and DeFi combine

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

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

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

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

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

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