Tag Archives: stablecoins

Leadership Thought: Exploring Stablecoins and Their Role in Crypto Payments

Leadership Thought: Exploring Stablecoins and Their Role in Crypto Payments

Stablecoins have emerged as a pivotal component, offering a bridge between the volatile nature of digital currencies and the stability of traditional fiat money. Anndy Lian, a best-selling book author, and Tran Hung, CEO of UQUID, explore the adaptability of stablecoins in crypto payments and their potential to revolutionize the financial landscape.

Stablecoins are digital currencies pegged to a stable asset, such as the US dollar, to minimize price volatility. As they become integral to the crypto ecosystem, understanding their impact on finance and daily transactions is crucial. This episode brings together two thought leaders to discuss the current state and future potential of stablecoins in the world of payments.

The Role of Stablecoins in the Cryptocurrency Ecosystem
Anndy Lian emphasizes that stablecoins serve as a crucial element in the cryptocurrency ecosystem, acting as a stable medium for transactions. They provide a familiar denomination for users, akin to the US dollar, facilitating easier and more understandable transactions. Stablecoins also encourage broader adoption of cryptocurrencies by offering a less volatile alternative for payments and investments.

Tran Hung highlights the impact of stablecoins in emerging markets, where fiat currencies often face devaluation. Stablecoins offer a reliable store of value, allowing users to preserve their purchasing power. In UQUID’s ecosystem, stablecoins have become a preferred payment method, enabling users to make purchases without worrying about currency fluctuations.

Stablecoins and Cross-Border Payments
Stablecoins are revolutionizing cross-border payments by offering faster, cheaper, and more transparent transactions compared to traditional methods. Tran Hung notes that stablecoins enable instant settlements, reducing the time and cost associated with cross-border transactions. This transparency and efficiency make stablecoins an attractive option for global commerce.

Anndy Lian adds that the transparency of blockchain technology enhances the security of cross-border payments. Transactions can be easily tracked and verified, providing an additional layer of security. Moreover, the stability of stablecoins compared to other cryptocurrencies makes them a preferred choice for international transactions.

The Future of Stablecoins and Central Bank Digital Currencies (CBDCs)
As central banks explore the development of their own digital currencies, the relationship between stablecoins and CBDCs becomes a topic of interest. Anndy Lian believes that stablecoins and CBDCs can coexist, serving different purposes. While stablecoins facilitate quick and low-cost transactions, CBDCs can act as a stable store of value within domestic markets.

Tran Hung agrees, noting that CBDCs are likely to operate on private blockchains, focusing on local transactions and government-related payments. In contrast, stablecoins, built on public blockchains, offer global accessibility and can be used across borders. This distinction allows both forms of digital currency to complement each other in the evolving financial landscape.

The Dominance of USDT in the Stablecoin Market
USDT, or Tether, has maintained its dominance in the stablecoin market due to its first-mover advantage and widespread adoption. Anndy Lian attributes USDT’s success to its early entry into the market and its ability to capture significant liquidity. Despite controversies, USDT has established itself as a reliable and widely used stablecoin.

Tran Hung emphasizes the trust that users have in USDT, particularly in emerging markets where stablecoins offer a solution to currency devaluation. The liquidity and accessibility of USDT make it a preferred choice for both individual users and large institutions.

The Future of Crypto Payments
Looking ahead, both experts envision a future where stablecoins play a central role in crypto payments. Anndy Lian hopes to see a diversification of payment methods, with other cryptocurrencies gaining traction alongside stablecoins. He believes that embracing a variety of digital currencies can drive further adoption and innovation in the crypto space.

Tran Hung sees stablecoins as a gateway to broader cryptocurrency adoption, particularly in regions with unstable fiat currencies. He anticipates that stablecoins will continue to gain popularity, offering a stable and efficient payment method for everyday transactions.

Conclusion
Stablecoins are not just a trend but a transformative force in the world of payments and commerce. From enabling cross-border transactions to providing a stable store of value, stablecoins are reshaping the financial landscape. As we look to the future, the continued evolution and adoption of stablecoins will play a crucial role in driving financial inclusion and innovation.

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Stablecoins in Singapore: Navigating Between Promise and Pitfalls

Stablecoins in Singapore: Navigating Between Promise and Pitfalls

In recent years, Singapore has emerged as a global leader in embracing cryptocurrency and blockchain technology. With a forward-thinking approach, the city-state has been at the forefront of fostering innovation while maintaining a keen eye on regulatory safeguards. As the discussion around stablecoins gains momentum, the question arises: Is Singapore truly ready to harness the potential of stablecoins, and what implications could this digital evolution bring?

What is Stablecoin?

A stablecoin is a type of cryptocurrency specifically designed to maintain a steady value relative to another asset, which could be a fiat currency or a commodity. This unique characteristic sets stablecoins apart from more volatile cryptocurrencies like Bitcoin and Ethereum.

Stablecoins can be categorized into two main types:

Fiat-backed stablecoins: These stablecoins are backed by traditional fiat currencies, such as the US dollar or the euro. To ensure their stability, the issuer holds reserves of the corresponding fiat currency in a bank account. Each stablecoin is intended to be redeemable for a specific amount of the backing fiat currency.

Crypto-backed stablecoins: In this type, stablecoins are backed by other cryptocurrencies like Bitcoin or Ethereum. The issuer maintains reserves of these cryptocurrencies in a wallet, with each stablecoin representing a defined amount of the backing crypto.

There are algorithmic stablecoins as well, which lack direct backing by physical assets. Instead, algorithms are employed to regulate their value, often involving the burning or minting of tokens to maintain stability.

Stablecoins serve various purposes, including:

  • Payments: Stablecoins can be utilized for everyday transactions, such as purchasing goods and services or transferring funds between individuals.
  • Investing: Some use stablecoins as a means to invest in other cryptocurrencies or as a tool to hedge against the price volatility of more unpredictable cryptocurrencies.
  • Decentralized Finance (DeFi): Stablecoins play a crucial role within decentralized finance applications, enabling activities like lending and borrowing in the DeFi ecosystem.
  • Speculation: Certain individuals engage in speculative trading of stablecoins, aiming to capitalize on potential price fluctuations and generate profits.

Stablecoins have gained prominence due to their potential to combine the advantages of blockchain technology with the stability of traditional assets. Their versatile applications across various sectors underscore their significance in shaping the future of digital finance.

Singapore’s Crypto-Friendly Stance

Singapore has long been acknowledged as a welcoming environment for the crypto sector, a stance that’s been in place since the beginning. The Monetary Authority of Singapore (MAS) has actively fostered the growth of fintech ventures, attracting investments and entrepreneurial endeavors aimed at contributing to the country’s advancement. The MAS has undertaken a thoughtful and deliberate path toward regulating cryptocurrencies, striving to strike a balance between promoting innovation and ensuring the safeguarding of consumers and investors from potential hazards.

Singapore has successfully introduced several crypto-friendly frameworks, some of which encompass:

Payment Services Act: Commencing in January 2020, Singapore saw the implementation of the Payment Services Act. This step was a response to the Financial Action Task Force’s updated 2018 guidelines concerning Anti-Money Laundering (AML) and the Combatting of Financing of Terrorism (CFT) risks that cross borders in relation to cryptocurrencies. The Payment Services Act establishes an adaptable structure for overseeing payment systems and providers of payment services in Singapore. It sets forth requirements for registration, in addition to guidelines for AML and CFT targeted at cryptocurrency businesses.

Cryptocurrency Consumer Protection Law: In the middle of January 2022, Singapore’s MAS enacted a set of laws focused on safeguarding investors from the relentless exposure to digital asset content through mediums like billboard ads and crypto ATMs. This initiative led to the prohibition of all cryptocurrency-linked advertisements and the operation of crypto ATMs in public spaces. The MAS, in its communication, emphasized its encouragement of blockchain technology development and innovative applications of cryptocurrencies. However, it cautioned against the high risk associated with cryptocurrency trading, discouraging any presentation that downplays these substantial risks.

Pioneering Role and Recognition: Singapore has emerged as a trailblazer in the cryptocurrency arena, attributed to its favorable regulatory and tax frameworks, as well as its broad incorporation of blockchain technology across various sectors of its economy. By the close of 2021, the reputable global crypto rating firm Coincub conferred Singapore with the top ranking of the world’s most crypto-friendly country. This accolade was attributed to factors such as a robust economy, a supportive legislative environment, and an elevated level of cryptocurrency adoption.

In August 2023, the MAS introduced a comprehensive regulatory framework tailored to stablecoins. This move followed an extensive consultation with the public in October 2022 on this specific topic. The framework is designed to ensure stablecoins regulated within Singapore maintain a substantial degree of value stability. It permits single-currency stablecoins pegged to the Singapore Dollar or other G10 currencies, issued within Singapore. These stablecoins are required to facilitate full cash withdrawals within five days upon customer request. Furthermore, issuers must possess a minimum base capital of one million Singapore dollars or half of their annual operating expenses. They are also mandated to maintain a corresponding level of capital and liquid assets to safeguard against insolvency and effectively manage any related consequences. Stablecoin providers that fulfill these rigorous criteria receive the coveted “MAS-regulated stablecoins” endorsement. This signifies to the global community that these instruments offer a level of security on par with other financial instruments.

This newly established regulatory framework underscores the MAS’s unwavering commitment to promoting transparency and diligent oversight over the burgeoning crypto sector, all while invigorating innovation within the city-state. By instituting robust regulations, firms that adhere to the stipulated criteria and address the multitude of associated risks can thrive and operate. This approach not only fosters innovation but also serves as a shield, protecting consumers and investors against potential threats. Singapore is positioning itself favorably for the anticipated developments of 2030, when an economy centered around tokenization is expected to take shape.

Benefits on the Horizon

The adoption of stablecoins and Central Bank Digital Currencies (CBDCs) holds transformative potential for Singapore’s financial landscape. Efficiency gains are a driving force, promising quicker and more cost-effective payment solutions. Moreover, these digital currencies could attract increased investment, bolstering the country’s economic prospects.

Financial inclusion could experience a boost as well. Stablecoins offer a digital alternative to traditional banking, providing easier access to financial services. This accessibility is crucial in a digital age where the barriers of physical proximity are being dismantled.

Mitigating the Risks

While the promise of stablecoins is enticing, it’s essential to navigate the potential pitfalls diligently. One concern lies in the volatility of stablecoin prices. Despite being pegged to real-world assets, market dynamics could still lead to fluctuations, potentially exposing investors to financial risks.

Cybersecurity remains another significant challenge. As digital assets, stablecoins are stored on vulnerable digital ledgers, susceptible to cyberattacks. Ensuring robust security measures is imperative to safeguard users’ funds.

The regulatory landscape is yet another dimension of consideration. As governments worldwide grapple with the evolving nature of cryptocurrencies, regulations could change, impacting the use and trade of stablecoins.

Balancing Act: Embracing the Promise, Managing the Risks

Singapore’s readiness for stablecoins rests on a foundation of thoughtful regulation and an environment conducive to innovation. As the government collaborates with the private sector to develop CBDCs and pioneers stablecoin frameworks, the nation is poised to capitalize on the benefits of these digital assets.

The road ahead entails a delicate balance, where the potential for financial inclusion, streamlined payments, and enhanced security must be weighed against market volatility, cybersecurity risks, and evolving regulations. Singapore’s journey into the realm of stablecoins is an ongoing narrative that showcases the city-state’s commitment to harnessing the power of innovation while safeguarding its citizens and investors.

In this dynamic landscape, the question of whether Singapore is ready for stablecoins takes on greater significance. The answer may very well shape the trajectory of digital finance not only within Singapore but on a global scale.

 

 

Source: https://www.techopedia.com/stablecoins-in-singapore-a-promising-path-or-potential-pitfalls

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

What is the role of stablecoins in digital assets ecosystem

What is the role of stablecoins in digital assets ecosystem

In my view, stablecoins are a form of private money. The concept is not new. As long as the community recognizes this as a form of money, then it is money.

Having said so, it depends on whether you are talking about dollar-collateralized, company-collateralized, cryptocurrency-collateralized, or non-collateralized stablecoins. Each kind of design comes with pros and cons. For the time being those that are properly collateralized and approved by a country’s financial services authority would be in favor and can be the forerunner.

This process is still in the research stage for many countries. Ideally, in the longer term, I would like to see interoperability between various stablecoins and CBDCs. This will then bring out the true meaning of crypto and a new era of financial systems.

– Anndy Lian

 

What is the role of stablecoins in digital assets ecosystem

The cryptocurrency market, which continues to tackle uncertainties around it, has seen the usage of stablecoins multiply in last couple of years. According to data by European Central Bank, stablecoins’ market capitalisation increased from €23 billion to around €150 billion in the Q1, CY2021. In September, 2021, around 75% of trading on cryptocurrency platforms involved stablecoins. Market behaviour suggests that stablecoins are being used to trade cryptocurrency assets. “Stablecoins act as intermediary when cryptocurrency investors want to exit a market position and re-enter it later. Stablecoins can help with trading between different cryptocurrency exchanges, and can also help investors with their financial stability when cryptocurrency markets are bearish in nature,” Sathvik Vishwanath, co-founder and CEO, Unocoin, a cryptocurrency exchange, told FE Digital Currency.

Reportedly, stablecoins such as Tether, USD Coin and Binance USD account for close to 90% of the total stablecoin market. According to experts, stablecoins can be used as a currency because of its collateral value being associated with the United States Dollar (USD). Information from Federal Reserve, a government body, mentioned that a two-tiered banking system, where banks are supervised under state and federal levels, can support both stablecoin issuance and maintain traditional forms of credit creation. “As stablecoins are backed by financial services authorities, it can be a frontrunner in the cryptocurrency space. In the longer-term, I believe interoperability between stablecoins and central bank digital currencies (CBDCs) will take place,” Anndy Lian, chief digital advisor, Mongolian Productivity, a governmental organisation, said.

It is believed that stablecoins can help to bridge the gap between cryptocurrencies and fiat currencies, due to their relatively low price volatility. “Stablecoins can be used to ensure monetary balance as companies can pay salaries and conduct transactions between different geographies. As stablecoins can be tracked, governments can implement regulations to excercise control over it without their complete ban,” Aliasgar Merchant, lead developer of relations, Akash Network, a decentralised cloud platform, stated.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j