Singapore stablecoins to gain market share as ‘last-mile’ settlement product

It’s been a hectic two weeks at StraitsX for its incoming chief, Kenny Chan. StraitsX is the issuer of the XSGD and XIDR stablecoins, which are pegged to the Singapore dollar and Indonesian rupiah, respectively.

Image credit: Tech in Asia

With the co-founder and current head of the company, Aymeric Salley, starting his new job on Monday, the pressure is on for Chan to step up as StraitsX’s new boss. Pronto.

“There’s definitely more than two weeks of stuff to handover,” Chan jests in a group interview with Tech In Asia together with Salley. Prior to his new role, Chan had been heading the strategy unit at Fazz, the parent company of StraitsX that provides payment services to small and medium-sized businesses in Southeast Asia.

He joined Fazz in June last year after a five-year stint at Grab, where he was involved in the company’s Nasdaq listing as the head of corporate strategy.

Chan looks tired but is otherwise jovial – the transition has gone smoothly. He’s got big shoes to fill.

In Salley’s three years at StraitsX, he grew XSGD into the world’s second largest stablecoin that isn’t pegged to the US dollar, after Stasis Euro. XSGD has a market capitalization of about US$60 million spread across about 7,600 holders. The firm’s other stablecoin, XIDR, was launched in November 2021.

There’s still room to grow, says Chan. He points out that while the US dollar is dominant in the foreign exchange market, there’s still room for other currencies. The stablecoin market, however, is almost completely flooded with those pegged to the US dollar.

To be specific, according to data compiled by the Bank of International Settlements, the US dollar is used in 88.5 out of 100 of all forex trades; the Euro, as the second most-traded currency, is used in 30.5 out of 100 trades. The Singapore dollar ranks 10th at 2.4 out of 100 trades.

“Just by the sheer launching of stablecoins in new currencies and finding more utility, we think that the percentage [for non-US dollar stablecoins] is probably going to go higher,” adds Chan.

Web3 tethered to the US dollar

With Binance now exploring non-US dollar stablecoins amid increased regulatory scrutiny in the US, the question at the top of everyone’s mind is: Why aren’t there more non-US dollar stablecoins? More philosophically, if Web3 aims to be truly decentralized, why are stablecoins denominated in just one single currency?

The answer is surprisingly straightforward: There isn’t much one can do with non-US dollar stablecoins at the moment, other than serving as an on/off ramp for crypto.

Even in the most obvious use case – digital payments – non-US dollar stablecoins like the XSGD are in far less demand compared to USD Coin (USDC) and Tether (USDT).

Last-mile payments

Road to scale