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Singapore opens the door to a shrinking market

Hello and welcome to the latest edition of the FT Cryptofinance newsletter. This week we’re taking a look at a potential new crypto arms race

Singapore has given blockchain firm Paxos an in-principle green light to issue a stablecoin — a kind of crypto token pegged to a hard currency.

The firm plans to launch the cryptocurrency through its new Singaporean entity. It will be pegged to the US dollar and fully backed one for one by the dollar and cash equivalents.

Close followers of the crypto sector will remember Paxos as the issuer behind BUSD, the Binance-branded stablecoin that has faded to near-irrelevancy ever since falling foul of New York regulators earlier this year.

Nevertheless the Paxos approval marks a potential change of fortune for the crypto sector’s record in Singapore, after the collapse of several high-profile projects in the city state, including crypto hedge fund Three Arrows Capital and stablecoin operator Terraform Labs. 

Singapore state-owned investor Temasek was also forced to write off its $275mn stake in former industry bellwether FTX after the exchange’s famous collapse into bankruptcy a year ago. Temasek has said its trust in FTX’s former chief executive Sam Bankman-Fried — now convicted of fraud and other charges — appeared “misplaced”. 

Readers of this newsletter will know that the UK has already laid its stablecoin cards on the table, setting out guidelines to regulate the digital tokens in a bid to try to facilitate their use as a payment option for everyday goods and services. 

So Singapore’s fresh embrace of a key digital assets market one week later might lead you to believe the international stablecoin arms race is heating up, especially as the large shadow cast by the US Securities and Exchange Commission and its crypto crackdown appears to be here to stay.

While it’s tempting to suggest that the US’s actions on crypto open the door for the sector to boom elsewhere, the available data doesn’t seem to back up the claim. 

There is little compelling evidence to suggest demand exists for dollar-pegged stablecoins in Singapore, or even in Asia as a whole. 

Identifying the parts of the world where stablecoin interest is highest is a challenge: crypto traders often use virtual private networks, or VPNs, to disguise their location from the prying eyes of regulators or governments that don’t take kindly to crypto trading. 

Interest in the market can still be gauged by measuring the largest trading pairs between the world’s sovereign currencies and largest stablecoins. If, for example, one of the top fiat trading pairs for Tether — the world’s largest dollar-pegged token — is the Singaporean dollar, it would be fair to deduce that traders from the city state represent one of the stablecoin’s most popular markets.

But, according to numbers provided by industry data platform CCData, the top five trading pairs for Tether’s USDT token are the US dollar and the euro, followed by the Turkish lira, Thai baht and the British pound. 

Column chart of The top five fiat trading pairs for Tether's USDT in 2023 ($bn) showing The Singaporean dollar is not notably trading with the world's largest stablecoin

The outlook for Singapore’s stablecoin push doesn’t improve when you look at Circle’s USDC stablecoin, the second-largest token of its kind with roughly $24bn circulating in the market. Predictably, the US dollar and the euro lead the way, trailed this time by the pound, baht and the Australian dollar. 

Column chart of The top five trading pairs for Circle's USDC in 2023 ($bn) showing Users are also not trading Singaporean dollars in exchange for USDC

Other notable stablecoins include DAI — an algorithmic cryptocurrency much like the failed Terra token of 2022 — and BUSD, which, despite hemorrhaging market share since its issuance was banned by the New York State Department of Financial Services, still remains the fifth-largest stablecoin in the market.

Significant trading pairs for these tokens again offer little encouragement for a city state trying to reassert its grip on crypto markets: the Korean won, Brazilian real and Mexican peso all make notable entries for these tokens, while the Singaporean dollar is nowhere to be seen.

Paxos’s push into Singapore, according to Paxos’s head of strategy Walter Hessert, is fueled by its ambition to “open the financial system to everyone, introducing significant opportunities to global markets and billions of users”.

But since its $188bn peak in April last year, the stablecoin market cap has fallen roughly 33 per cent to $126bn today. So while Paxos tries to break new ground in Singapore, it is doing so in a market that is not expanding.

What’s your take on Singapore’s most recent crypto moves? As always, email me at

Weekly highlights:

Read More: Singapore opens the door to a shrinking market

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