Kenny Chan from StraitsX Explains How Stablecoins Could Impact Global Financial Ecosystem

 

Kenny Chan, GM at StraitsX, recently shared key insights with Crowdfund Insider. StraitsX is a payments infrastructure for the digital assets space in Southeast Asia. The company is also 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.

StraitsX offers personal and business account holders to mint and redeem StraitsX stablecoins, manage payments as well as connect their accounts to digital asset platforms. Business accounts can also access B2B API-enabled payment rails for digital asset platforms.

Chan heads all business operations at StraitsX, and also leads Strategy and Investor Relations at Fazz. Prior to his time at Fazz, Chan played an integral role in building Grab into one of Southeast Asia‘s Superapps, and was also involved in the company’s Nasdaq listing as Head of Corporate Strategy.

Our conversation with Kenny Chain is shared below.


Crowdfund Insider: Can you tell me more about StraitsX and how it is enabling greater financial inclusion in ASEAN through stablecoins?

Kenny Chan: StraitsX is the payments infrastructure for digital assets in Southeast Asia, and we are focused on creating a payments ecosystem that is secure, transparent, and inclusive, providing a robust alternative to traditional payment networks. With a strong focus on blockchain and stablecoin technology, our expertise lies in enabling seamless payments, money transfers, currency exchange, and cross-border transactions.

This is done through constant development of sophisticated and reliable payments technology connected directly to existing payments infrastructure (ie. FAST, SWIFT, QRIS, VISA, stablecoins). Through robust B2B API-enabled payment rails that integrate digital asset platforms with traditional financial systems, we are able to make financial transactions more streamlined and efficient. StraitsX also offers personal and business account holders the capability to mint and redeem stablecoins, manage payments, and connect seamlessly with digital asset platforms.

With Southeast Asia’s digital economy set to hit $100 billion in revenue, digital asset developments in the region are evolving at breakneck speed. This rapid growth presents a unique opportunity to bridge the financial inclusion gap by leveraging the accessibility and scalability of digital assets such as stablecoins. As more individuals and businesses in the region gain access to digital financial services, stablecoins can play a pivotal role in offering a secure and effective alternative to traditional baking systems which are often inaccessible to many in Southeast Asia.

By integrating stablecoins into the financial ecosystem, StraitsX aims to provide seamless cross-border payments, lower transaction costs, and wider access to financial services – driving economic participation and growth in Southeast Asia and beyond.

Crowdfund Insider: How do you see stablecoins playing a larger role in the global financial system beyond payments?

Kenny Chan: Stablecoins are set to play a transformative role in the global financial system beyond simply serving as a medium for payments. In regions like Southeast Asia, a majority of the population lacks access to traditional banking services due to geographical, economic, and infrastructural barriers.

Stablecoins provide a practical solution by enabling individuals and businesses to access financial services directly through their mobile phones. This capability is crucial for integrating underserved communities into the global financial system, allowing them to participate in economic activities without the encumbrance of finding a physical bank branch and setting up a traditional bank account.

At StraitsX, we are deeply committed to driving financial inclusion and addressing unequal access to digital currencies and payments. Being strategically positioned in the heart of APAC’s dynamic financial hub, we understand the complexities and challenges many institutions and users face in adopting digital assets.

Our unwavering mission is to continually expand and integrate our stablecoins across various networks and markets to ensure broader accessibility. For instance, our XSGD stablecoin’s integration with the Hedera Network has made digital currencies more accessible and supporting our goal of financial inclusion by reaching a wider audience.

Beyond financial inclusion, stablecoins offer a compelling solution for streamlining costs and complexities often associated with cross-border transactions. Traditional international money transfers are often slow, expensive, and laden with bureaucratic hurdles. This is particularly beneficial for migrant workers who rely on remittance services, as it significantly reduces the fees and processing time involved with such transactions.

The transformative power of stablecoins also enhances the transparency and efficiency of financial services. By integrating with digital platforms, stablecoins facilitate instant, low-cost transactions and allow for real-time settlement.

This not only mitigates the risk of transaction delays but minimises foreign exchange fluctuations, leading to seamless financial operations. Lastly, stablecoins also act as a crucial bridge between traditional financial systems and burgeoning decentralised finance (DeFi) platforms.

This integration fosters the development of more inclusive financial services with a wider reach and the democratisation of financial services enables individuals and businesses to engage in previously inaccessible economic activities.

Crowdfund Insider: What are some of the potential regulatory hurdles for stablecoin adoption in Southeast Asia, and how can digital asset and payment infrastructure providers enable the smooth and secure integration of stablecoins into the existing financial system?

Kenny Chan: When it comes to stablecoin adoption in Southeast Asia, several potential regulatory hurdles need to be addressed to ensure a smooth and secure integration into the existing financial system. Innovation and the scaling of new technology do not occur in isolation. To cultivate a thriving digital assets and payment infrastructure within APAC, a conducive and collaborative regulatory environment is key.

This environment should foster a collaborative approach where regulators and innovators recognise their roles in ecosystem development, supported by partners who can propel their business onto a global scale.

In Southeast Asia, the digital asset landscape is complex as regulatory frameworks vary significantly from country to country. Navigating these differing regulatory landscapes requires a nuanced understanding of local laws and regulations and the ability to adapt quickly to their ever-evolving nature.

To overcome these challenges, it is crucial for institutional players, fintech companies, and regulators to establish robust public-private partnerships. Such partnerships are instrumental in establishing a harmonised regulatory framework that supports the growth of digital assets and stablecoins. By working closely together, these stakeholders can ensure that regulatory measures are not only compliant with local laws but also support the broader goals of financial inclusion and innovation.

Moreover, digital asset and payment infrastructure providers must prioritise security and transparency to build trust in stablecoin adoption by developing an interoperable, scalable, and secure infrastructure that can integrate seamlessly with existing financial systems, minimising disruption and enhancing the user experience.

While there are significant regulatory hurdles to stablecoin adoption in Southeast Asia, they are not insurmountable. By fostering a collaborative regulatory environment, establishing public-private partnerships, and prioritising security and transparency, digital asset and payment infrastructure providers can pave the way for seamless and secure integration of stablecoins into the existing financial system. This collaborative approach will not only support the growth of digital assets but also contribute to the next evolution of the global financial ecosystem.

Crowdfund Insider: With CBDCs on the rise, how will this impact stablecoin utility in the region?

Kenny Chan: With the imminent rise of central bank digital currencies (CBDCs), the financial landscape in Southeast Asia is poised for significant transformation. In 2023, we saw a surge in tokenised real-world assets driven by financial institutions. This curiosity is evolving into a concerted effort in 2024 to create better, cheaper, and faster markets focused on unlocking liquidity.

This exploration of tokenisation and digital currencies by traditional financial institutions signals a positive shift as these players aim to enhance the current monetary system, unlock new liquidity, and modernise global financial infrastructure.

Several projects and initiatives in the region exemplify this shift – such as Project Orchid by the Monetary Authority of Singapore (MAS). Project Orchid is focused on developing the infrastructure and technical competencies necessary for a digital Singapore dollar. It explores the potential use cases, benefits, and challenges of a central bank digital currency (CBDC), aiming to enhance financial inclusion and payment efficiency. Another notable example is Project Bakong, initiated by the National Bank of Cambodia, which uses blockchain technology to provide a central bank-backed digital currency to facilitate transactions and promote financial inclusion.

These initiatives showcase how traditional financial institutions are actively engaging in the tokenisation of assets and the development of digital currency solutions, aiming to streamline financial operations, reduce costs, and expand access to digital financial services across Southeast Asia.

CBDCs bring both opportunities and challenges for the utility of stablecoins in the region. While offering a state-backed, secure alternative to traditional money and potentially fostering greater trust and mainstream adoption of digital currencies, CBDCs may not fully replicate the unique advantages offered by stablecoins. Unlike CBDCs, which are often pegged to fiat currencies, stablecoins offer superior flexibility by pegging to a wider variety of assets.

Moreover, stablecoins facilitate seamless cross-border transactions and better integration into decentralised finance ecosystems which is particularly important in the Southeast Asian region where cross-border trade and remittances play a critical role in its economy.

We believe in a global financial future where CBDCs and stablecoins can coexist harmoniously and thrive without diminishing their unique utility. Instead, CBDCs and stablecoins can complement each other to cater to the ever-evolving needs of today’s digitally native users.

As financial institutions and fintechs continue to push the boundaries of what digital assets can achieve, fostering cross-collaboration between regulators, central banks and other ecosystem players will be paramount in building a secure and robust infrastructure for the region’s digital currencies.

Crowdfund Insider: What are some digital asset innovations that you’re excited about?

Kenny Chan: Regulatory bodies across Southeast Asia are leading the charge in fostering the exploration and experimentation of cutting-edge technologies in areas such as cross-border payments, wealth management, and trade finance, paving the way for responsible and secure adoption throughout the region. The Monetary Authority of Singapore (MAS)’s regulatory sandbox exemplifies this progressive approach by enabling fintech firms and financial institutions to test new digital asset innovations within a controlled environment.

One notable initiative is Project Orchid which is focused on the development of a programmable digital Singapore Dollar (SGD) in the form of a Central Bank Digital Currency (CBDC) and tokenised bank deposits.

At StraitsX, we view innovation as an ongoing process that thrives on industry collaboration. One such project that we’re particularly excited about is our partnership with Grab and Ant International. This partnership delves into the potential of purpose-bound money (PBM) to revolutionise cross-border payments. By integrating with GrabPay and Alipay+, we aim to create a seamless international payment experience for tourists, significantly reduce transaction costs, and boost regional payment efficiency.

Furthermore, the expanding role of stablecoins and digital currencies in consumers’ daily lives presents another exciting avenue to foster greater financial inclusion. Our XSGD stablecoin exemplifies how we are making digital currencies more accessible and we strive to continue democratising access to financial tools across the region.

Blockchain’s deployment in areas such as trade finance is another exciting development as it streamlines transactions, reduces operational costs, and enhances efficiency and security. The regulatory sandbox provided by MAS plays a pivotal role in this endeavour as it facilitates close cross-collaboration with regulators and innovators, ensuring that innovations within the financial ecosystem adhere to the highest standards.

We believe with the power of stablecoins, DeFi has the potential to democratise access to essential financial tools such as lending and trading, effectively bridging the gap for the unbanked and underbanked communities in our globalised world.



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