Stablecoin issuer Paxos has tapped Singapore’s DBS bank as its custodial partner. The bank will be responsible for cash management and the custody of Paxos’ stablecoin reserves.
This is the first time the DBS Group, which is the nation’s largest bank, will hold stablecoin reserves.
DBS and its cryptocurrency ties
The recent move is expected to deepen the bank’s roots in the cryptocurrency sector. Highlighting the bank’s future plans, Evy Theunis, head of digital assets at DBS, said:
We look forward to partnering leading stablecoin issuers for their cash management and reserve custody needs if they meet the regulatory requirements.
In its official press release, Paxos noted that DBS is an “ideal partner” as it is “recognized as a leader in banking innovation.”
DBS first forayed into the cryptocurrency space in 2020 with the launch of its crypto trading and custody service. Back then, the bank said it would not hold any crypto assets and would only offer custodial services.
However, a recent Nansen report suggested that it had flagged an Ethereum whale, which it believed was DBS.
Last year, the bank’s Chinese arm introduced new digital yuan-related solutions for mainland China residents. The offering allowed local businesses to receive payments in the central bank digital currency (CBDC).
DBS is also a part of Singapore’s Project Guardian. Launched by the Monetary Authority of Singapore (MAS), the initiative aims to explore and expand the applications of blockchain technology within the financial markets.
Paxos continues global expansion
The collaboration with the Singaporean banking giant follows Paxos’ Singaporean arm getting a green light from the MAS to offer its services.
Paxos Digital Singapore can now offer digital payment token services as a “Major Payments Institution” and issue stablecoin in compliance with Singapore’s upcoming stablecoin framework.
Walter Hessert, Head of Strategy at Paxos, noted that MAS has “rigorous regulatory standards” when it comes to stablecoin issuance, adding:
Receiving approval from MAS is an important step for Paxos and our global enterprise partners to safely offer access to US dollars to more users around the world.
With this approval, Paxos is now licensed to operate in three markets, including the US and United Arab Emirates (UAE).
The recent collaboration closely follows Paxos’s UAE arm announcing an interest-bearing stablecoin called the Lift Dollar (USDL).
The stablecoin will be regulated by the Abu Dhabi Global Market (ADGM) and backed 1:1 by liquid U.S. government securities and cash reserves.
Amidst this backdrop, the stablecoin issuer has also slashed 20% of its workforce and announced its intentions to wind down its settlement services in commodities and securities.
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