Macauley Peterson

<div id="highlights-block_61d6e48a83669" class="highlights">
 <ul>
 <li>XSGD was chosen as Wirex&#8217;s first APAC-based stablecoin</li>
 <li>Wirex users will be able to spend XSGD via the Wirex card</li>
 </ul>
 
</div>



The Singapore dollar-backed stablecoin XSGD now has a market capitalization of about $206 million US dollars, <a href="https://www.coingecko.com/en/coins/xsgd" target="_blank" rel="noreferrer noopener">as tracked by Coingecko</a>, amid a total stablecoin market approaching $170 billion. That’s just 0.1% of the total stablecoin market, and yet it makes XSGD the third largest non-USD currency in the <a href="https://www.coingecko.com/en/categories/stablecoins" target="_blank" rel="noreferrer noopener">stablecoin category</a>, after the euro.



The three leading euro stablecoins Euro Tether, Stasis Euro, and sEUR (from Synthetix) collectively register about $411 million.



The US dollar shows little sign of relinquishing its dominance any time soon, however StraitsX co-founder <a href="https://cms.blockworks.co/a-majority-of-stablecoins-will-be-non-usd-says-straitsx-founder/" target="_blank" rel="noreferrer noopener">predicted in October</a> that a majority of stablecoins will eventually be non-USD denominated.



Ease of on-boarding into stablecoins remains the chief barrier to adoption and that’s what the latest announcement from Wirex, a worldwide digital payment platform created in 2014, seeks to address.



The London-based firm developed the world&#8217;s first crypto-enabled payment card in 2015, allowing users to spend crypto alongside traditional currencies, and now sports around 4.5 million customers in 130 countries, according to the company.



“It&#8217;s vital to offer a wide variety of tokens to suit all users, regardless of their lifestyle and experience with crypto,” said Wirex co-founder and CEO Pavel Matveev in a statement on Thursday, noting that stablecoins are key to attracting new users who seek to avoid the rampant volatility of other digital assets.



Wirex first supported stablecoin was MakerDAO’s DAI back in 2019, but newly available on the platform are True (TUSD), USD Coin, (USDC), Tether (USDT), Paxos&#8217; USDP, Stasis Euro (EURS) and XSGD, with the caveat that only some stablecoins are available in certain regions.



StraitX introduced <a href="https://cms.blockworks.co/straitsx-launches-indonesia-rupiah-stablecoin/" target="_blank" rel="noreferrer noopener">an Indonesian Rupiah-backed stablecoin</a> in November, and it’s sister company FinTech Xfers is licensed by the Monetary Authority of <a href="https://cms.blockworks.co/?s=singapore" target="_blank" rel="noreferrer noopener">Singapore</a> for e-money issuance.



Aymeric Salley, Head of StraitsX, sees a bright future for 11 ASEAN group of countries in Southeast Asia, and said in a statement, “we&#8217;re delighted to see Wirex pioneering this effort with XSGD now being supported by the Wirex platform. We look forward to users being able to spend XSGD via the Wirex card.&#8221;



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Aymeric Salley

Neobank Wirex Expands Stablecoin Roster

Sam Reynolds

<div id="highlights-block_619b86d6b037b" class="highlights">
 <ul>
 <li>Crypto adoption is surging in Indonesia, as the country’s growing middle class looks for investment alternatives to real estate and equities</li>
 <li>Aymeric Salley, the co-founder of StraitsX, told Blockworks in a prior interview that one day the majority of stablecoins will be denominated in currencies that aren’t the USD</li>
 </ul>
 
</div>



StraitsX, the company behind XSGD, the Singapore-dollar denominated stablecoin which is quickly becoming one of the larger non-USD denominated stablecoins, announced today the launch of an Indonesian rupiah-denominated stablecoin, the XIDR. 



Indonesia has quickly become a regional hotspot for crypto trading, with the <a href="https://www.thejakartapost.com/news/2021/08/05/indonesia-now-has-more-crypto-investors-than-stock-market-investors.html">Jakarta Post</a> reporting that the country has more crypto investors than stock investors now, owing to the fact that most major equities on the board are state-owned and have provided only stale returns.&nbsp;



“XIDR presents a way for the unbanked population to gain access to financial services. It also represents our next step to enabling, democratizing and accelerating access to digital assets for individuals and businesses in Asia and beyond,” Aymeric Salley, co-founder of StraitsX said in a statement.&nbsp;



In a <a href="https://cms.blockworks.co/a-majority-of-stablecoins-will-be-non-usd-says-straitsx-founder/" target="_blank" rel="noreferrer noopener">previous interview with Blockworks</a>, Salley has said that he believes that eventually the majority of stablecoins will be denominated in currencies aside from the USD as crypto takes off in emerging markets and locals prefer to denominate their transactions in their own currency.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“StraitsX does not believe that this current state is representative of the market demand but rather the consequence of a lack of trusted and compliant alternatives denominated in other native fiat currencies,” he said.</blockquote>



Part of this market demand has come from what local traders have called the ‘Rendang Premium’, named after a local soup, a premium added to crypto transactions in the country when converting USD to rupiah, given the relative lack of liquidity of the currency. 



The XIDR isn’t the first rupiah-denominated stablecoin. There’s also the Binance IDR, used primarily on the Binance-backed Tokocrypto exchange and the <a href="https://rupiahtoken.com/">RupiahToken</a>. 



There are also <a href="https://cms.blockworks.co/j-p-morgan-testing-blockchain-to-solve-money-transfer-woes/" target="_blank" rel="noreferrer noopener">a number of projects</a> in the country backed by Indonesian banks using blockchain technology to develop more efficient remittance platforms for its migrant worker population. In May, PT Bank Negara Indonesia announced a partnership with J.P Morgan to use J.P Morgan’s Confirm tool on its blockchain-powered <a href="https://www.jpmorgan.com/onyx/liink">Liink network</a> to expedite wire transfers from Taiwan where <a href="https://en.wikipedia.org/wiki/Demographics_of_Taiwan" target="_blank" rel="noreferrer noopener">250,000 Indonesian migrant workers reside</a>.  



<h3 class="wp-block-heading">Indonesia’s religious council calls crypto ‘Haram’</h3>



A potential obstacle to widespread adoption of crypto in-country is Indonesia’s national religious council. The National Ulema Council of Indonesia, or MUI, has declared that cryptocurrency’s speculative nature means that it is ‘Haram’, or forbidden for Muslims.&nbsp;



Ahmad Fahrur Rozi, a spokesperson for the East Java branch of Nahdlatul Ulama, one of Indonesia’s largest Islamic organizations, told Australia’s ABC that crypto trading tends to involve &#8220;fraudulent practices and gambling&#8221;, hence why it is illicit for Muslims.&nbsp;



&#8220;Just like it&#8217;s not allowed for a person to buy indistinct objects, like &#8216;fishes in the sea&#8217; or &#8216;birds in the air&#8217;,&#8221; <a href="https://www.abc.net.au/news/2021-11-21/cryptocurrency-is-considered-haram-in-indonesia/100630646" target="_blank" rel="noreferrer noopener">he told the broadcaster</a>, saying that people speculate on crypto’s value without knowing the material reason for its change in value.



This, however, is subject to debate. A blog post on UK-based Islamic equity crowdfunding platform <a href="https://www.qardus.com/news/what-is-cryptocurrency-and-is-it-halal" target="_blank" rel="noreferrer noopener">Qardus</a> quoted Sharia advisor Mufti Muhammad Abu-Bakar who views cryptocurrency as acceptable for Muslims as all commodities and currencies are subject to some form of speculation.



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StraitsX Launches Indonesian Rupiah Stablecoin

<div id="highlights-block_617bb781b68a0" class="highlights">
 <ul>
 <li>Singapore is capitalizing on an uncertain regulatory environment in the US when it comes to stablecoins</li>
 <li>Blocking the city-state’s growth are legacy monetary policies and demand for USD-pegged stablecoins just like how the USD dominates in global trade</li>
 </ul>
 
</div>



While the vast American bureaucratic and legislative leviathan goes through the machinations of determining how to regulate stablecoins, the governor of Singapore’s Central Bank, the Monetary Authority of Singapore, <a href="https://www.bloomberg.com/news/articles/2021-10-27/singapore-minister-sees-a-place-for-crypto-in-asia-finance-hub">has</a><a href="https://www.bloomberg.com/news/articles/2021-10-27/singapore-minister-sees-a-place-for-crypto-in-asia-finance-hub" target="_blank" rel="noreferrer noopener"> </a><a href="https://www.bloomberg.com/news/articles/2021-10-27/singapore-minister-sees-a-place-for-crypto-in-asia-finance-hub">said</a> that crypto has a place in the future of finance. But even if Singapore embraces digital assets and stablecoins, will the market really jump away from a world of USD-denominated stablecoins?



The market is clamoring for certainty, as Jerald David, President, of Arca Capital Management put it in an interview with Blockworks. All eyes are on DC as the wait for concrete policy — which can come in different flavors — is expected to be over soon, he explained. Clarity in the US could come from either a federal mandate from the SEC which would “trigger drastic action on the part of incumbents” in the stablecoin space, or a mandate to continue the current “patchwork of regulations” led by FinCen.”&nbsp;&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Just like how we spent many months waiting for a bitcoin ETF, next we are going to be waiting for the SEC to issue guidance on stablecoins,” he told Blockworks.&nbsp;</blockquote>



By contrast, in Singapore, this waiting and uncertainty doesn’t exist. Instead, this has all been replaced with codified rules for what authorities there call e-money. Representing the Singapore dollar, XSGD is the first project to take advantage of this, and its co-creator Aymeric Salley told <a href="https://cms.blockworks.co/a-majority-of-stablecoins-will-be-non-usd-says-straitsx-founder/" target="_blank" rel="noreferrer noopener">Blockworks in a recent interview</a> that he sees a future where the “USD will eventually only represent 50% or less of the total stablecoin value in circulation.”



But can such a future be wished into existence? It might not be that easy. Despite the regulatory uncertainty in DC, there really isn’t anything else out there like the US dollar. Singapore has an active policy to discourage the internationalization of the SGD. In a paper written by <a href="http://docplayer.net/5628845-Singapore-s-policy-of-non-internationalisation-of-the-singapore-dollar-and-the-asian-dollar-market.html" target="_blank" rel="noreferrer noopener">One Chong Tee</a>, the deputy managing director of MAS’ Financial Supervision Department, he explained that exchange rate is the principal tool of monetary policy in the country. Given the island nation’s reliance on imports, exchange rates, not money supply, is the key financial tool in their arsenal — which also provides resistance against short telling currency attacks.&nbsp;



“Smaller economies are concerned that their currencies will no longer be relevant to their economy,” said National University of Singapore finance processor David Lee in an interview with Blockworks.



<h2 class="wp-block-heading">Is the SGD the only option for a non-USD stablecoin?</h2>



Vince Yang, founder of the DEX zkLink, pointed to Dubai as a potential solution. Yang, who is actively analyzing international crypto regulation as a necessary part of running a DEX, said that the country is building a solid compliance framework and a monetary policy that also integrates crypto.&nbsp;



And this crypto-friendly monetary policy is based around the currency of the nation, the Dirham, being pegged to the US dollar. Since November 1997, the fiscal policy of the UAE has been to peg its currency to the USD at a rate of 3.6725 Dirham to the dollar. “The market hates uncertainty, which is why it’s exploring regulatory hedges like the XSGD and fueling its growth,” Arca’s David said. “But the market also likes the USD. So with Dubai’s currency, you have the friendly regulatory support and the backing of the USD — just divide it by 3.6725, and you get a dollar.”



Most stablecoins are a proxy for the US-dollar. Could the future of stablecoins include proxies of a proxy of the greenback?

Singapore Strives to be Home for Stablecoins, but Challenges Lie Ahead

<div id="highlights-block_6177bf22ac9a1" class="highlights">
 <ul>
 <li>XSGD is a stablecoin tied to Singapore’s dollar and is regulated under the country’s payment services act as e-money</li>
 <li>StraitsX sees international demand for the XSGD, but will Singapore’s policy of non-internationalization of the Singapore dollar stymie efforts?</li>
 </ul>
 
</div>



Stablecoins are approaching a market cap of <a href="https://www.coingecko.com/en/categories/stablecoins" target="_blank" rel="noreferrer noopener">nearly $135 billion</a>, with daily trading volume close to $75 billion. While Tether dominates the ranks as the top issuer, its competitors such as USDC, Binance’s BUSD, DAI, all have something in common: their stablecoins are issued in US dollars.



Will the uncertain regulatory environment surrounding stablecoins in the US create a market for non USD denominated tokens? Can any other currency be as internationalized as the USD?



Per CoinGecko’s <a href="https://www.coingecko.com/en/categories/stablecoins" target="_blank" rel="noreferrer noopener">market dominance data</a>, USD-denominated stablecoins make up about 98% of all the stablecoin volume. This is a heavier weighting than the USD’s role in international fiat markets where, <a href="https://stats.bis.org/statx/srs/table/d11.3" target="_blank" rel="noreferrer noopener">according to Bank of International Settlement data</a>, the dollar appears 88% of the time on either side of a transaction. You need to dig deep down the list to find 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 their real life counterparts they are pegged against.&nbsp;



But Aymeric Salley, the co-founder of StraitsX, which issues XSGD, a Singapore-dollar based stablecoin, doesn’t think it always has to be like this. In an interview with Blockworks he said that this isn’t for lack of demand but rather lack of alternatives. 



“StraitsX does not believe that this current state is representative of the market demand but rather the consequence of a lack of trusted and compliant alternatives denominated in other native fiat currencies,” he said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We believe that many other stablecoins denominated in many fiat currencies will emerge, and USD will eventually only represent 50% or less of the total stablecoin value in circulation.”</blockquote>



While Singapore has a policy of <a href="https://www.bis.org/publ/bppdf/bispap15l.pdf" target="_blank" rel="noreferrer noopener">discouraging the internationalization</a> of the SGD in order to keep its value reflective of its economy, there is one very specific advantage that XSGD has, which could lead to its broad international adoption: Singapore’s e-licensing framework.&nbsp;



Salley explained 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 single fiat currency, which encompasses the monetary value of the fiat currency. Under their license, StraitsX can mint XSGD digital tokens, with a local bank taking full liability for the money collateralizing the stablecoin.&nbsp;&nbsp; This is a massive contrast to the US where stablecoin legislation is vague and unclear, and the largest stablecoin issuer, Tether, is in <a href="https://cms.blockworks.co/tether-settles-with-cftc-for-42-5m/" target="_blank" rel="noreferrer noopener">frequent conflict</a> with regulators because of the uncertainty of its reserves.



There is considerable debate amongst legal experts that under US securities laws, some stablecoins would represent securities while others would be considered money transmitters.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1) Stablecoins are already regulated 2) Some are securities, some money transmitters, some are both 3) Noncompliant stablecoins operating in the open means that existing laws aren&#39;t being timely enforced, not that new laws are needed 4) Mais que fait la police? <a href="https://t.co/7FbtzGekIm">pic.twitter.com/7FbtzGekIm</a>&mdash; Preston Byrne (@prestonjbyrne) <a href="https://twitter.com/prestonjbyrne/status/1405547439914946560?ref_src=twsrc%5Etfw">June 17, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Within Washington, <a href="https://www.wsj.com/articles/biden-administration-seeks-to-regulate-stablecoin-issuers-as-banks-11633103156" target="_blank" rel="noreferrer noopener">there’s a proposal</a> working its way around the White House to regulate stablecoins via bank charter. But internally it&#8217;s also causing significant debate, the Wall Street Journal reports, over the specific regulatory tool used to address the issue. On one side is the Financial Stability Oversight Council, which would designate stablecoin activities as systemically important and require more stringent risk management rules to be put in place.&nbsp;



But 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 <a href="https://www.coindesk.com/policy/2021/10/19/gensler-for-a-day-how-rohan-grey-would-regulate-stablecoins/" target="_blank" rel="noreferrer noopener">STABLE Act</a>, the first legislative proposal to deal with stablecoins.



<a href="https://cms.blockworks.co/us-sec-set-to-crack-down-on-stablecoins-in-new-report/" target="_blank" rel="noreferrer noopener">A recent report from Bloomberg</a> 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 on-chain transaction value, Salley said, and it&#8217;s now listed on CEX.IO, Uniswap as well as 1inch. Its available trading pairs are also expanding, with the Indonesian exchange Indodax now listing one.



Although the XSGD has a legal green light to operate, there’s the lingering question as to how much it can grow. No currency in the world has achieved internationalization like the greenback, so why would a non-USD digital token equivalent be ready for world domination?



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Aymeric Salley

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