StraitsX trials stablecoins and purpose bound money use cases at SFF 2022
Stablecoins are seeing increased adoption as more real-world use case applications and benefits are being developed for trade and commerce. Stablecoins are digital assets that remain stable in value against a pegged external asset class, like currency for example. In the US, the USDC is a stablecoin that is pegged to the US Dollar.
In Singapore the Monetary Authority of Singapore (MAS) has licensed StraitsX to pilot a series of stablecoin applications in the country. Announced at the Singapore Fintech Festival (SFF) 2022, StraitsX aims to showcase stablecoins’ real-world use case applications and benefits for trade and commerce. StraitsX will be collaborating with IDEMIA, The HBAR Foundation, Mastercard, and Carbonseed.Earth on driving five key benefits of stablecoins.
They include increasing payment efficiency, on-chain and offline programmability providing interoperability, spurring financial inclusion, and enabling sustainable and energy-efficient transactions.
According to Aymeric Salley, Head of StraitsX, the digital assets landscape has been evolving and gaining traction as more businesses recognize the benefits of blockchain technology, but there is still untapped potential when it comes to using stablecoins as a means of payment in real-world use case applications.
“These applications demonstrate how stablecoins can bring forth more innovation and we are excited to collaborate with industry leaders to explore the benefits of stablecoins in depth to showcase the viability of stablecoin usage in business applications like B2B settlement, offline payments, and sustainability,” said Salley.
For StraitsX, it plans to highlight three different real-world use case applications with its key partners as part of its showcase of stablecoin. The showcase will leverage its Singapore dollar stablecoin, XSGD as a means of payment. XSGD is a stablecoin pegged to the Singapore Dollar.
XSGD runs on the Ethereum, Zilliqa & Polygon blockchains.
Financial inclusion, B2B and sustainability
For financial inclusion, one of the biggest issues is unequal access to digital currencies and payments arising from network and geographical limitations. StraitsX has partnered with IDEMIA, a leading solutions provider in identity technologies to leverage the Hedera decentralized ledger, enabling users to transact stablecoins offline.
This is powered by IDEMIA’s payment card and phone-embedded offline payment capabilities which allow users and merchants to transact offline securely. Merchants will then be able to leverage Hedera’s distributed network to receive payments and settle fund transfers. This application will not only lower merchant fees but also drive financial inclusion by allowing users who have limited network access to transact stablecoins.
StraitsX has also partnered with Mastercard to enable Mastercard crypto partners to use XSGD to facilitate settlements between businesses. The current settlement process for crypto card partners is cumbersome and costly due to the requirement of converting from crypto into fiat, which imposes liquidity and operational constraints for card partners. This pilot aims to bridge between the digital assets spent by cardholders and the fiat currencies needed to settle with merchants, reducing friction and achieving greater operational efficiencies.
With sustainability on the agenda, StraitsX collaborates with Carbonseed.Earth, which is building an incubation infrastructure for carbon projects. This incubation infrastructure leverages stablecoin and IoT technology to enable early funding for quality carbon projects by issuing tokenized carbon credits, purchased through XSGD and held in blockchain wallets.
By utilizing Carbonseed.Earth’s monitoring and verification solutions and blockchain wallets to facilitate stablecoin and carbon credit transactions, the application enhances transparency for price discovery and addresses the issue of double counting through smart contract technology. On a larger scale, the application also helps to facilitate efficient cross-border transfers of value involving tokenised carbon credits.
StraitsX is the pioneering payments infrastructure for the digital assets space in Southeast Asia. StraitsX is a Major Payment Institution licensed by the Monetary Authority of Singapore and is part of Fazz’s ecosystem of financial services which powers business banking in Southeast Asia.
From stablecoins to purpose bound money
During SFF, 5,000 selected trial participants were be able to utilize purpose bound money (PBM) in the form of digital vouchers through their preferred blockchain e-wallet application. The vouchers sponsored by Temasek could make purchases at selected F&B outlets at the SFF 2022.
GrabPay, Grab’s payment service, is also working with StraitsX and digital currency payment gateway TripleA to support the last-mile settlement of PBM. This is done by accepting StraitsX’s XSGD on the Polygon chain, and reflecting the Singapore-dollar pegged stablecoin as SGD in the participating merchants’ GrabPay accounts. GrabPay will also be the main merchant payments processor for the PBM pilot at SFF this year – it will pay out to participating merchants in SGD on an on-demand basis, and remove any need for merchants to invest in end-of-day reconciliation between two accounting systems.
PBM is explored as part of Project Orchid, building upon the concept and capabilities of both programmable payment and programmable money. This pilot project will delve into the enablement of PBM for the widespread distribution of money for commercial purposes, and its interoperability with e-wallets, payment systems and rails, and blockchains, allowing consumers to purchase goods and services through their preferred platform with PBM tokens.
PBM will enable individuals and organizations to embed logic-based conditions in the form of smart contracts that are automatically verified when submitted for transfers. At the same time, payments can be made more efficiently, as the PBM token will unwrap and release the underlying digital currency, transferring it to a merchant’s digital wallet in real time. The digital currency can then be used by the recipient immediately for other payouts. In this pilot, the digital currency will be reflected as SGD and paid out to the participating merchants in SGD.
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