DBS Group Holdings, Singapore’s largest bank, has partnered with Paxos Trust, a US-based cryptocurrency issuer. This collaboration marks the first time DBS will provide custody for stablecoin reserves and offer related cash management services. The move is part of DBS’s broader involvement in the digital-asset ecosystem.

The announcement followed Paxos’ receipt of a license from the Monetary Authority of Singapore. Evy Theunis, head of digital assets at DBS’s institutional banking group, stated that DBS is poised to support leading stablecoin issuers with their cash management and reserve custody needs, provided they meet regulatory requirements.

Singapore’s blockchain ambitions

Singapore aims to enhance its status as a global financial hub by promoting productive uses of blockchain technology, the basic tech of cryptocurrencies. Advocates claim stablecoins could transform traditional finance by making payments faster, easier, and cheaper, though this remains to be proven on a large scale.

Stablecoins are typically linked to major currencies and backed by reserves such as cash and bonds. They are primarily used in crypto trading and can be lent out to earn interest. As of now, stablecoins worth approximately USD 162 billion are in circulation. Tether Holdings’ USDT leads the market with a 70% share, followed by Circle Internet Financial’s USDC at 20%—Paxos, though smaller, issues USDP and PayPal Holdings’ PYUSD.

However, some stablecoins have experienced significant failures, such as the $40 billion collapse of Do Kwon’s TerraUSD project. This has prompted various administrations, including Singapore, Dubai, Hong Kong, Japan, and Europe, to develop digital asset regulations to protect investors and encourage development.

Stablecoin regulation and banking partnerships

Both Paxos and Circle Internet Financial have secured the necessary permits in Singapore. The country’s stablecoin regulations require issuers to meet specific capital, reserve, and disclosure standards. According to a company spokesperson, Paxos plans to issue US dollar-based tokens in Singapore.

Cantor Fitzgerald serves as Tether’s custodian, while Circle’s custodians in the United States include the Bank of New York Mellon. Paxos uses several institutions, such as BMO Harris Bank, State Street Bank and Trust, and Customers Bank.

The evolving regulations have improved the outlook for crypto companies, which previously struggled to access banking services due to the industry’s history of instability and scandals. Increased global interest rates have also highlighted commercial opportunities in reserve management.

Grace Chong, head of the financial regulatory practice at Drew and Napier in Singapore, noted that banks can expand their offerings and effectively manage risks associated with cryptocurrencies by collaborating with stablecoin companies.

Leadership changes at Paxos Singapore

Paxos recently appointed Jeannie Lim as its executive director in Singapore. Previously head of messaging payments at Meta Platforms in Singapore, Lim will develop and drive Paxos’ strategic vision and goals for the Asia-Pacific region. She will oversee new business opportunities and partnerships and maintain engagement with key clients, partners, and regulators across the region.

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