Singapore startups trying to buck the greenback with SGD stablecoins

In Token Issue this week, we dive into Singapore dollar stablecoins and look at the continued crypto crackdown by the US SEC. [Read from your browser]( Token Issue Welcome to Token Issue! Delivered every Friday, this free newsletter breaks down the biggest stories in Asia’s crypto scene and beyond. View past issues [here]( or [sign up here]( to receive future newsletters. Written by Shihan Fang Crypto journalist Hi {NAME} Change is afoot in the Singapore stablecoin landscape. The most obvious one is a leadership transition at [StraitsX]( issuer of the fiat-backed [XSGD]( and the poster boy for regulatory compliance. Today’s the last day for co-founder [Aymeric Salley]( who’s starting a new job on Monday. He’s keeping the new role a surprise - not even his colleagues know. [Kenny Chan]( former head of corporate strategy at Grab, will take up the mantle. He has spent 9 months warming up as the head of strategy at StraitsX’s parent company, [Fazz](. None of this may matter in the near future if the Bank of International Settlements has its way. The global banking regulator plans to [stamp out]( stablecoins, leaving room only for its cousins - deposit tokens and central bank digital currencies. These are exciting times for Chan, who’s going to slay it on his first day at work. 💪 For the rest of us, this week’s premium story gives some insight on how he’s going to navigate StraitsX in these choppy waters. -- Shihan  ---------------------------------------------------------------  🤿 THE DEEP DIVE  [Singapore stablecoins to gain market share as “last-mile” settlement product]( StraitsX started out as an e-wallet company before moving on to e-money. The company’s XSGD stablecoin, issued under its e-money license, is e-money minted on blockchain. Simply, XSGD is backed 1:1 with the Singapore dollar - nothing fancy. XSGD is currently the second largest non-US dollar stablecoin in the market after Stasis Euro. Incoming boss Kenny Chan is cognizant of XGSD’s limitations: It will never challenge the dominance of USD Coin (USDC) or Tether (USDT). XSGD’s growth, however, will be driven by solving pertinent problems related to last-mile settlement, domestic payments, and “programmable money.” I spoke to both Chan and Aymeric Salley, the outgoing head of StraitsX, to find out where the company is headed. This is the third story in an ongoing series about non-US dollar stablecoins. Read about [their yen-pegged counterparts]( as well as [Australian dollar stablecoins]( and [deposit tokens]( in the links.  --------------------------------------------------------------- 👀 ALL EYES ON... *What everyone’s talking about.* 1️⃣ [All cryptocurrencies except bitcoin are securities, SEC chair says. Crypto lawyers disagree]( Gary Gensler, chair of the US Securities and Exchange Commission (SEC) [was grilled]( on his relationship with FTX founder Sam Bankman-Fried and Gensler’s plans to be the de-facto regulator for the crypto industry. His view of SEC’s remit is straightforward: the agency should have oversight over all crypto transactions except spot transactions in Bitcoin and the use of crypto tokens for payment. [Replies from crypto lawyers]( were swift. In short, Gensler’s opinion on crypto doesn’t matter. Whether cryptocurrencies are securities or not will have to be decided in court, and under the current law, that amounts to over 12,300 lawsuits that the agency will have to file to cement its rule over the industry. 2️⃣ [More than US$1 billion of B-peg USDC had no collateral last year: Forbes]( Binance transferred US$1.8 billion of collateral for its [B-peg]( USDC stablecoins to hedge funds without informing its customers, according to [Forbes’ analysis]( of blockchain data between August 17 to early December last year. This meant that more than S$1 billion of B-peg USDC had no collateral for that period of time. A spokesperson of the crypto exchange said that the transactions Forbes identified were related to internal wallet management and didn’t affect the collateralization of user assets. This isn’t the first time stablecoins wrapped by Binance were flagged for not being fully backed. B-peg Binance USD (BUSD) had similar issues and was likely the reason for [the ban of the original BUSD issued by Paxos](. Coinbase [tweeted]( this week that it would stop all BUSD trades on March 13 after finding that the token no longer met the exchange’s standards. 3️⃣ [Global crypto rules coming in September: G20 announcement]( These new regulations will be based on a “synthesis paper” jointly produced by the International Monetary Fund (IMF) and the Financial Stability Board. The shift from skepticism to acceptance among the global regulators was the result of FTX’s collapse, which demonstrated the risks of crypto assets. IMF managing director Kristalina Georgieva was specifically [enthusiastic about fully-backed stablecoins]( but not the rest of the crypto world. She also said that the agency would aim to differentiate between central bank digital currencies and publicly issued crypto assets and stablecoins.  --------------------------------------------------------------- ⭐ TO THE STARS Impactful developments and projects in Web3. 1️⃣ [Prominent Japanese companies to build ‘Japan Metaverse Economic Zone’]( This group of Japanese firms, including Fujitsu and Mitsubishi, aims to develop an interoperable ecosystem of different metaverse services and platforms in the country. It also seeks to build an open metaverse infrastructure called “Ryugukoku,” which will support the creation of interoperable tools for users and developers. This is set to be a landmark year for Japan as far as Web3 is concerned. The government will loosen stablecoin regulations in June, paving the way for [yen-pegged stablecoins]( like Gyen to enter the domestic market. GMO Trust, the issuer of Gyen, is now in the clear after a [lawsuit against it in the US was thrown out.]( Leading Japanese crypto exchange [BitFlyer may also file for a stock exchange listing]( in the coming months if founder Yuzo Kano gets reinstated as CEO. 2️⃣ [Liquid Staking Replaces DeFi Lending as Second-Largest Crypto Sector]( Liquid staking is now the second-largest crypto market after decentralized exchanges (DEXs), according to data from [DefiLlama](. At the time of writing, there was US$14.16 billion in total value locked (TVL) in liquid staking protocols and US$19.34 billion in DEXs. Liquid staking allows users to stake cryptocurrency to earn rewards while receiving a “liquidity token” in return, which can then be deployed for other purposes. The sector is currently the best-performing in crypto this year, having grown nearly 60% in TVL due to the impending Ethereum Shanghai software upgrade. 3️⃣ [NFT whales have moved to Blur]( Blur, a non-fungible token marketplace upstart, has just become the boss, clocking in nearly 370,000 ether (about US$6 million) worth of trades in the past week, according to data from [NFTGo](. At the time of writing, Opensea was trailing far behind with 76,000 ether (about US$12.3 million) in trading volume during the week. A co-founder of Blur [doxxed himself]( last week, revealing himself to be Tieshun Roquerre, a high school dropout that enrolled into startup incubator Y Combinator at 17 years old. He then studied at MIT before quitting to start Web3 name registrar Namebase with the support of a Thiel Fellowship. The company was eventually sold to a competitor, Namecheap.  --------------------------------------------------------------- MORE TO CHEW ON Stuff that’s good to know. 1️⃣ [Indonesia AR firm Assemblr launches social hub metaverse]( Assemblr Metaverse lets users meet with clients or colleagues in a virtual space. It comes with avatar customization and allows users to share images, video, or 3D animations. There’s no installation required - the metaverse can be accessed using only a web browser. 2️⃣ [VC firm closes fund in Singapore]( Blockchain Founders Fund (BFF), a Singapore-based VC firm that backs early-stage blockchain startups, closed its US$75 million fund this week with support from key industry investors such as Polygon, Ripple, Octava, and AppWorks. Singapore-based DEX DigiFT also secured [US$10.5m in pre-series A]( money. 3️⃣ [Crypto conglomerate reports loss of US$1.1 billion in ‘challenging’ 2022]( Digital Currency Group (DCG) struggled with plunging crypto prices and the restructuring of its lending platform, Genesis. DCG held US$5.3 billion in terms of total assets as of December 31, including cash and cash equivalents of US$262 million, the firm’s Q4 investor report showed. Investment assets - including crypto tokens, trust shares of its digital asset manager subsidiary Grayscale, as well as venture and fund investments - amounted to $670 million. 4️⃣ [SEC issues subpoena to Robinhood for crypto operations]( Retail trading app Robinhood has received an investigative subpoena from the US Securities and Exchange Commission regarding its crypto operations, according to the company’s filing to the regulator. The subpoena came shortly after FTX filed for bankruptcy on November 11. 5️⃣ [Indonesia-based social commerce startup RateS scales back operations]( RateS provides dropshipping solutions with added inventory management services. Jake Goh, the firm’s co-founder and CEO, said that the majority of FMCG sales agents on its platform were laid off due to the company’s decision to no longer offer products in this vertical to resellers. However, Goh isn’t giving up, as he said that the startup’s aiming for a new funding round. RateS has raised US$10 million since its inception in 2021, including a US$4.5 million series A+ round led by Vertex Ventures Southeast Asia and India in January 2022. Prior to RateS, Goh founded asset tokenization platform Rate3 and ecommerce payment solution RateX, both in 2018. He raised [US$15 million]( via an initial coin offering for the former and [US$3 million]( for the latter. The websites of both companies are now inactive.  --------------------------------------------------------------- That’s all for this issue - we hope you liked it. WAGMI! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2023 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894