StraitsX, a digital assets provider based in Singapore, is working to integrate stablecoins into everyday transactions in Southeast Asia, where digital wallet adoption is growing steadily. Liu Tianwei, chief executive officer of StraitsX and Kenny Chan, head of StraitsX, emphasised the company’s role in driving this adoption.

Founded in 2020, StraitsX (formerly known as Xfers) has emerged as a key player in building digital asset payment infrastructures. “We see blockchain and stablecoins as a back-end innovation,” explained Tianwei. “As a payment company, we’ve been at the heart of the innovation in the past decade.” StraitsX issues stablecoins, including the Singapore dollar-backed XSGD and its US dollar-backed XUSD. Stablecoins are designed to maintain a stable value by being pegged to fiat currencies, making them more reliable for payments and transactions than other cryptocurrencies.

From pilot projects to mainstream partnerships

StraitsX first collaborated with the Monetary Authority of Singapore (MAS) as part of Project Orchid, a multi-year initiative exploring the technology to develop a digital Singapore dollar. The project tested use cases for creating purpose-bound money (PBM) via blockchain. PBM is a programming protocol that sets conditions for how digital currency may or may not be used, providing security and accountability for transactions such as payouts, grants, subsidies, or rewards.

StraitsX's initial project was a PBM pilot using XSGD as non-fungible token (NFTs) in 2023. The project involved regional fintechs offering lifestyle service providers such as Grab and Fave, and institutional banks like United Overseas Bank. PBMs were issued as NFT vouchers to customers, allowing payments at over 200 merchant outlets islandwide in Singapore. “We wanted to demonstrate the use case to purchase goods in a controlled environment, yet have it fully compliant and interoperable with different wallets and merchants,” said Tianwei. The PBM was integrated with Grab’s Web3 wallets. In the second quarter of 2024, Grab reported 41 million monthly transacting users in Southeast Asia alone, demonstrating the market potential for XSGD through this pilot.

Building on its successful 2023 pilot, StraitsX expanded its partnership with Grab to include Ant International’s Alipay+ in 2024. Now, Alipay users in Hong Kong, China, and Malaysia and across 16 wallets can pay at 25,000 Grab quick response (QR) code merchants in Singapore. “The whole process eliminates Web3 complexities, removing the need to create a Web3 wallet. Consumers can simply scan the QR code and pay through their home payment apps,” explained Tianwei. Merchants receive real-time payment in XSGD. Use of PBM is restricted to payments for goods and services only, adding security by ensuring XSGD goes only to verified wallets and merchants. “The end user sees Alipay, the merchant will accept it through GrabPay, but behind the scenes, it is settled with XSGD,” he added.

StraitsX builds on this foundation by strengthening transaction security through embedded compliance checks. “What we think is really powerful is the embedded client compliance checks that are built into the transaction itself,” said Chan. By integrating data from Alipay and Grab, StraitsX performs real-time compliance checks on transactions. “This gives regulators and the government more confidence in our ability to prevent misuse, money laundering, or any other unauthorised activities,” he added.

These checks are further supported by know your customer (KYC) protocols, which verify the identities of individuals or businesses involved in transactions. “These payments come from KYC-verified individuals or businesses, ensuring that the payment is for goods and services and in small denominations, not unknown peer-to-peer transfers,” explained Chan. This layered system ensures secure and compliant transactions.

Adapting to diverse enterprise use cases through blockchain

StraitsX recognises the unique advantages of different blockchain networks and emphasises the need for flexibility based on enterprise needs. Blockchain networks are secure digital systems that record and verify transactions across multiple computers, ensuring data transparency and immutability, or resistance to unauthorised alteration. Its stablecoins are compatible with multiple blockchain networks to meet diverse partner requirements. "Depending on enterprise’s use case, they may prioritise privacy preservation or towards speed and reliability.” This adaptability makes StraitsX’s stablecoins a versatile option for enterprises seeking flexible blockchain solutions.

StraitsX’s partnership with Alipay runs on Avalanche blockchain, a fast, low cost, and scalable network, while other partnerships may use different networks. For example, its partnership with Amazon uses the Polygon network, which is preferred by the e-commerce partner following a two-year pilot. Avalanche was chosen for its cross-compatibility with other blockchains, offering merchants versatility by enabling transactions across multiple networks. StraitsX handles large-scale payments to Alipay via Avalanche. “We want to bridge different ecosystems and allow users to build or use applications on this network,” said Tianwei. Although StraitsX aims for broad user adoption, Tianwei noted there’s still work to be done. “While early successes in interchain communication are promising, more time is needed for maturity. End users don’t need to understand the technical details, they just want a smooth experience,” he said. As the industry evolves, it may either progress towards a multi-ecosystem model or be dominated by a few large players.

Ensuring compliance within the regulatory landscape

StraitsX operates under a Major Payment Institution licence from MAS, enabling it to issue digital payment tokens and provide services around these tokens. Apart from StraitsX, only a few other stablecoin issuers, such as Paxos and Circle, have received this licence from MAS.

StraitsX considers its close relationship with MAS crucial to its success. “It is a great opportunity to work closely with MAS, because of the public-private partnership that is a core tenet of how regulation works in Singapore,” added Tianwei. He noted the increasing regulatory focus in other regions like Hong Kong and Europe, where the Markets in Crypto-Assets (MiCA) act is setting new regulatory standards. However, Tianwei stressed the need for further progress, especially in audits and financial compliance: “There are no international standards in accounting for stablecoin assets. We are working closely with the top-four auditors and enterprises to pave the way for financial institutions to include stablecoins in their balance sheets.”

StraitsX strictly follows MAS guidelines, including monthly public attestations on its stablecoin reserves. These attestations include a periodic check, as well as a randomly timed attestation each month. MAS regulations require reserves to be held in high quality, liquid assets like short-term treasury bills or cash equivalents to ensure stablecoins are properly backed. This strong compliance framework builds user trust and aligns StraitsX close to the standards of major financial institutions.

Unlike full audits, attestations only confirm the presence of reserves without providing detailed verification of financial records and risk assessments. As a result, stablecoins supported only by attestations, like XSGD, may not provide the same transparency as audited assets, potentially impacting confidence in their long-term stability.

Building on the success of pilots in Singapore

StraitsX is expanding its operations by building on the success of recent pilots. Its partnership with Grab and Alipay+ marks an important step towards broader PBM deployment for regulated digital payments. As part of its broader strategy, StraitsX is exploring the opportunity to scale its use case for the Indonesian rupiah-backed stablecoin, XIDR, across a network of 250,000 payment agents who provide cash and payout services. “We have the relevant licences and banking relationships, which gave us the confidence to launch XIDR,” said Tianwei. “We want to bring the same ‘scan and pay’ experience in Indonesia, with XIDR as the core for real-time settlement”.

StraitsX's focus on innovation, regulatory collaboration, and market expansion positions it as a notable player in Southeast Asia’s digital asset space. Their work showcases blockchain’s potential to foster a more inclusive and efficient financial ecosystem, laying the foundation for further expansion and growth across the region.