Revolut, Wise, YouTrip: What you need to know about multi-currency e-wallets in Singapore

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Mr Tan Kiang Khiang, course chair for Singapore Polytechnic’s diploma in banking and finance, said this applies to the other digital-only companies as well.

“They have (a) leaner setup than traditional banks. Hence, their cost of operations is lower,” he said.

These companies may also maintain pools of currencies in different countries so that cross-border transactions would not require actual money transfers, where fees and exchange rates would apply, he said.

Dr Wang Xin, an assistant professor from Nanyang Technological University, said offering good exchange rates can be a marketing strategy to attract customers. “Those payment apps earn money from merchants and through investing customer funds, not the currency exchange fees.”

CAN BANKS COMPETE?

Banks can use some of these strategies, and local banks do have multi-currency accounts where foreign transaction fees don’t apply, but the exchange rates are still usually not as good.

For example on Friday (Nov 24), the exchange rate for Singapore dollars to Japanese yen on YouTrip was S$1 to 111.5 yen, which is close to the rate shown on Google. The rate offered by DBS was 110.34 yen.

“While banks can also access these (wholesale currency) markets, their higher overhead and diverse business interests may hinder their ability to negotiate favourable rates as effectively,” said Mr Lee Yen Teik, a senior lecturer of finance at the National University of Singapore (NUS).

“Even without explicit fees, banks may still apply markups to their exchange rates, effectively increasing the cost for customers.”

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China’s property loan scheme may or may not work

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The Chinese government is reportedly drafting a white list of around 50 major property developers that will be allowed to borrow from banks more easily to maintain their construction work, a move that has at least temporarily lifted beleaguered property company shares.

The People’s Bank of China (PBoC), the National Administration of Financial Regulation and the Chinese Securities Regulatory Commission met on November 17 and jointly planned to offer new loans to certain property developers in the first quarter of 2024, according to some Chinese media. 

Hong Kong-listed property developers’ shares have surged by 20-30% over the past few days on the news. Longfor Group’s shares have gained 22% this week while Country Garden’s shares have skyrocketed 36%. Sunac China is up 29%. 

Meanwhile, Bloomberg reported on Thursday that China may allow banks to offer unsecured short-term loans, or so-called working capital loans, for the first time ever to some qualified developers.

Citing unnamed sources, the report said the new financing facility would be available for day-to-day operational purposes, helping property developers to free up capital for debt repayment.

Some property analysts said the new bank loan facility will help large property developers improve their cash flow while leaving smaller developers in the cold. They said the Chinese are still reluctant to purchase homes when prices keep falling. 

On November 8, an article with the title “Property prices in Shenzhen are collapsing” was widely circulated online. 

It said the average property price at Huajun Garden in Baoan district has dropped 57% to 1.85 million yuan (US$259,843) per unit from a peak of 4.2 million yuan a few years ago. Property prices have fallen 41% to 2.4 million yuan at Youlin Apartment in Nanshan district and decreased 46% to 3.9 million yuan at Longyueju in Longhua district.

Citing more than 15 cases, the article said property prices in Shenzhen have lost 30-50% in recent years, causing property investors and homebuyers to delay purchases. 

The article was republished by some media platforms in the following days after its publication but then it was inexplicably removed from the Chinese internet. A few netizens continue to circulate the article. 

Online commentators said it is not a surprise that Shenzhen saw a bigger fall in home prices than other Chinese cities as the technology hub’s property markets had grown faster than those in Beijing, Shanghai and Guangdong over the past decade. 

‘Financing black hole’

In July 2020, China’s financial regulators launched what they called “three red lines” that barred highly-geared property developers from receiving loans for expansion.

The negative impact of the policy started showing effects in the second half of 2021 as property giant Evergrande Group failed to pay its contractors, deliver homes and repay its wealth management product buyers.

Earlier this year, China’s property prices rebounded slightly after the country lifted all of its Covid-19 rules and regulations. But they fell again in the second quarter as people saw their income decline amid a slower-than-expected, post-Covid economic recovery. 

Following in the beleaguered footsteps of Evergrande, Country Garden and Sunac Group also failed to repay their offshore bond investors and were forced to file for bankruptcy protection in the United States. 

An Evergrande development in a file photo. Image: Twitter

Some Chinese media outlets speculated that highly indebted property developers, namely Country Garden, Shimao, Sunac and Cifi Group, will be included on the white list but others were skeptical.

“In the end, those with credit risks may not be added to the white list as they have poor reputations, which make it hard for them to sell their properties,” Zhang Zhifeng, a columnist at Guancha.cn, wrote in an article published on Wednesday.

“These companies also have different and complicated outstanding loans. Once they have access to new money, they may use it to repay their old debt, instead of spending it on business operations,” Zhang says. “While their net assets continue to shrink, the new loan policy may create a ‘financing black hole’ for them.”

“Risks in the property markets are growing and have affected some financially healthy private and state-owned property developers,” said Li Yujia, chief researcher at the Guangdong Planning Institute’s residential policy research center. 

“Banks are in general risk averse and avoid offering new loans to indebted property developers, or even call loans from them,” he said. “It’s possible that this trend will lead to systemic risks in the banking sector.”

Huang Wentao, chief economist of CITIC Construction Investment, said it’s likely that the financial regulators will treat healthy and problematic property developers with the same new lending policy, as long as the developers’ financing needs are reasonable. 

He said he expects the government to announce more supportive measures to boost property market sentiment.

Some commentators said although 50 major property developers will be able to take out new loans, 20,000 smaller developers will still suffer amid the property downcycle.

Declining home sales

In October, property sales declined 14.4% year-on-year to 809 billion yuan while property sales volume plummeted 20.3% to 77.73 million square meters, according to the National Bureau of Statistics.

In the first ten months of this year, property sales dropped 4.9% to 9.72 trillion yuan from the same period last year while property sales volume fell 7.8% to 925 million square meters.

For the same period, property investment in China decreased 9.3% to 9.59 trillion yuan. The figure fell only 9.1% year-on-year in the first nine months of this year.

Yan Yuejin, research director of the think tank center of E-house China, said the weakening property investment showed that many property developers are still suffering from cash shortages and high inventories.

Read: China’s economic recovery faces deflationary risks

Follow Jeff Pao on Twitter at @jeffpao3

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Yuan rally thickens China’s capital flight plot

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In the homestretch of 2023, China is calming fears for the year ahead that it might engage in a race to the bottom on exchange rates.

In recent days, China’s biggest state-owned banks bought the yuan in unison to support the currency. By swapping yuan for dollars in onshore markets and selling those dollars in spot markets, major banks are reassuring traders worried Beijing might chase the falling Japanese yen lower.

There are a few possible explanations for why China is putting a floor under the yuan. One is to reduce default risks among property developers servicing offshore debt. Another is to avoid fresh trade tensions with Washington. Beijing also wants to stanch the capital outflows now making global headlines.

What’s interesting, though, is that Chinese leader Xi Jinping is tolerating a firmer yuan at a moment when Asia’s biggest economy could really use an export boost. Overseas shipments fell 6.4% in October year on year following a 6.2% drop in September.

Yet Xi’s long-term commitment to internationalizing the yuan is taking precedence over short-term economic growth priorities — and that’s likely a good thing.

Since 2016, when China won inclusion into the International Monetary Fund’s top-five currencies club, Xi has made increasing the yuan’s role in trade and finance a major policy priority.

This objective paints China’s capital outflows dynamic in a new light. In other words, not all outflows are “bad” given that a large share at the moment appears to reflect China Inc leveraging overseas growth.

In the first 10 months of the year, China’s non-financial outbound direct investment (ODI) increased 17.3% year on year to 736.2 billion yuan (US$104 billion).

“The allure of new global markets and evolving business models are driving Chinese enterprises to venture abroad and expand their presence on the global stage,” notes economist Yi Wu, an author of the China Briefing newsletter published by Dezan Shira & Associates.

There are valid reasons why China’s take of foreign direct investment flows is facing headwinds. One is default concerns confronting County Garden Holdings and other giant property developers.

A porter walks on a bridge in Chongqing, China with new residential buildings in the background.
Photo: CNBC Screengrab / Zhang Peng / LightRocket / Getty Images

Another is disappointing data on manufacturing and retail sales. Xi’s team also has been slower to ramp up stimulus than in the past, fanning complacency concerns.

Yet an argument can be made that Xi’s real goal is staying focused on longer-term retooling, not short-term economic sugar highs.

“China only takes meaningful actions when there is a real crisis. The government and the market may have different opinions on whether China has an economic crisis,” says As Qi Wang, CEO of MegaTrust Investment. “It turns out the market over-worried, and China may be right not to over-stimulate.”

China, he adds, “doesn’t seem to be in a crisis mode,” at least “until recently” when the government finally realized it faces a “confidence crisis” as the economy slides back into deflation.

In recent weeks, this manifested itself in Beijing’s “national team” buying shares in top banks and loading up on exchange-traded funds to boost investor confidence. Xi’s recent visit to San Francisco, where he made nice with US President Joe Biden, marked the start of a financial charm offensive.

But machinations in Beijing smack more of longer-term objectives than panic in Communist Party circles. This goes, too, for China deflation risks, which burst back into global headlines.

Last month, mainland consumer prices fell a greater-than-expected 0.2% year on year. While not precipitous, the trend adds to “evidence of renewed economic weakness,” Capital Economics wrote in a note to clients.

Still, economist Robert Carnell at ING Bank calls it a “pernicious” turn of events for Xi’s party. “What China has right now,” he explains, “is a low rate of underlying inflation, which reflects the fact that domestic demand is fairly weak.”

Data show that Chinese suppliers of goods face intensifying headwinds, too. China’s producer price index, which measures goods prices at the factory gate, dropped 2.6% in October year on year.

The trend “reflects uncertainty around the solidity of China’s recovery,” says HSBC economist Erin Xin. It “will likely keep policymakers on guard to keep support coming through.”

And yet many observers are surprised the People’s Bank of China isn’t acting more forcefully to attack deflationary forces, lest “Japanification” speculation might intensify. The yuan exchange rate may be the missing link.

At a moment of ebbing global confidence in China’s economy, Xi and the PBOC are working to display some at home. The rationale appears to be that a stable exchange rate communicates self-assuredness on the part of Chinese institutions.

The PBOC is encouraging lenders to cap the volume of new loans in early 2024. Governor Pan Gongsheng’s team also is prodding banks to shift some lending programs forward to stabilize China’s credit cycle. Again, few hints of panic.

Pan Gongsheng, pictured here as vice governor of the PBOC, is working to steady the yuan. Picture: Twitter / Screengrab

Here, the ODI-is-a-good-thing argument also comes into play. Increased outward direct investment is a natural sign of economic maturity whereby domestic firms expand operations to foreign countries.

As Japan and South Korea demonstrated, it’s natural to tap overseas growth in case domestic markets become saturated.

In the first 10 months of 2023, Chinese ODI increased 11% from a year earlier. This strategy both reduces concerns about China’s balance of payments and hints at a longer-term payoff to Beijing keeping its cool.

Looking at Japan’s example, deflationary currents require a major recalculation in economic planning. Part of it is the PBOC knowing what it can and can’t control.

The capital outflows China is experiencing are as much a product of rising US bond yields as concerns about Xi’s economic strategies.

It remains unclear whether the US Federal Reserve will tighten rates further in the weeks ahead. Fed Chairman Jerome Powell’s team remains noncommittal.

This uncertainty is keeping Sino-US rate differentials at levels that favor the dollar. As money seeks higher returns, Chinese FDI fell nearly $12 billion in July-September year on year, the first quarterly drop since the State Administration of Foreign Exchange began reporting the data in 1998.

All this makes the yuan’s recent rise to four-month highs all the more noteworthy. At a minimum, it buttresses the argument that Beijing is propping up the yuan in defiance of where traders might want to push exchange rates.

This helps explain why as exports fall for a sixth straight month, imports are rising in ways that could support neighboring economies. Imports rose 3% from a year earlier to $218.3 billion. With exports dropping to $274.8 billion, Beijing’s trade surplus is now $56.5 billion, a 17-month low.

The lessons from Japan suggest that deflation tends to portend a strong currency down the road. Yet in Tokyo’s case, the emphasis has been on defying the laws of economic gravity and engineering a weak exchange rate.

As 2024 approaches, Japan is being reminded of the limits of this strategy. Since the late 1990’s, government after government clung to a weak exchange rate strategy to support the export-geared giants towering over Japan’s economy.

Yet the last decade of Bank of Japan hyper-easing merely exacerbated Tokyo’s all-liquidity-no-reform problem. It produced record corporate profits but failed to incentivize companies to boost wages, invest big in innovation, increase productivity or take risks on promising new industries.

A weak yen is the cornerstone of 25 years of modern capitalism’s most generous corporate welfare, one that continues to hold Japan back. Why should CEOs bother restructuring, recalibrating or reimagining industries when the BOJ prints free money decade after decade?

The yuan isn’t tracking Japan’s huge devaluation. Image: Getty / Screengrab / Al Jazeera

Xi’s team seems determined to avoid this outcome. Of course, Xi’s work to increase the yuan’s global footprint is far from done.

“The internationalization of the RMB is an ongoing process, with a promising future for China ahead,” says economist Elvira Mami at the Overseas Development Institute think tank. “Nevertheless due to the tight capital controls in China which prevent capital outflow, despite its growing use, the RMB  is not likely to replace the US dollar in the nearest future.”

Of course, discussions of China’s troubles can tend toward hyperbole.

“We do see some indications that supply chain shifts are underway globally and that FDI decisions are changing as well,” says Jeremy Zook, director of Asia-Pacific at Fitch Ratings. “But our view is that China will likely remain the dominant player in global supply chains for a long time and such shifts will only be gradual.”

A key prerequisite is restoring trust in China as a destination for capital. Since late 2020, when Xi launched a crusade against tech founders — starting with Alibaba Group’s Jack Ma — China has too often been in global headlines for all the wrong reasons. This has had Wall Street analysts debating whether China was becoming “uninvestable.”

Since March, newish Premier Li Qiang has worked to flip the script. Li’s team stepped up outreach efforts to reassure overseas chieftains that China is once again open for business.

The efforts come as international business lobbies urge Beijing to level playing fields, reduce local protectionism, make the regulatory environment less erratic and tamp down on national-security-related crackdowns.

In San Francisco last week, Xi received something of a hero’s welcome from Western CEOs keen to re-engage with China Inc. Attendees included Apple’s Tim Cook, Tesla’s Elon Musk and Blackstone’s Steve Schwarzman, among others.

Equally important, Xi and Li are making their most assertive push to date to fix China’s property crisis. The vital sector faces a nearly $450 billion shortfall in cash needed to regain its footing and to complete millions of unfinished apartments weighing on local economies.

Li’s reform team is cobbling together a list of 50 builders that will receive financial support. Among the distressed developers Beijing is targeting are Country Garden and Sino-Ocean Group. If coupled with bold regulatory reforms, investors have reason to hope China will avoid Japan’s lost decades.

The structural reform piece is vital. Any steps to increase transparency, allow full yuan convertibility, create a robust credit rating matrix, increase the size and freedom of the private sector, curb the role of state-owned enterprises and build social safety nets to encourage greater consumption would cheer global funds and improve China’s FDI trends.

Chinese President Xi Jinping and Premier Li Qiang in a file photo. Image: NTV / Screengrab

Efforts by Xi and Li to communicate that China is addressing these cracks and others are clearly falling short, witnessed in the huge capital flight unsettling world markets.

Yet even here it’s best to remember that not all the capital leaving reflects investors giving up on China. A growing share of outflows reflects China Inc going global in ways to be expected from any fast-rising economic superpower.

The same goes with letting the yuan rise, a sign that China’s leaders and policymakers aren’t as worried about the trajectory of the economy as many would suspect.

Follow William Pesek on X, formerly Twitter, at @WilliamPesek

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Emerging digital technology, alternative data and financial inclusion in Cambodia – Southeast Asia Globe

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Securing a loan can be a life-changing event, allowing people to access the capital necessary to start a business, buy a home, and invest in their future. But for Cambodia’s large underbanked and unbanked population, difficulty in accessing financial services, and an absence of the financial data used to assess creditworthiness, can make getting a loan challenging. According to the National Bank of Cambodia, only 59 percent of the adult population have access to formal financial services, leaving 41 percent either accessing informal financial services or no financial services at all.

However, developments in Cambodia’s lending landscape offer cause for optimism. The explosion in Cambodia’s fintech ecosystem, paired with the growing potential of alternative-data credit frameworks, could provide a path towards financial inclusion for those previously left out of the conversation.

Acccording to Ms. Phal-Chalm Theany, Secretary General of the Association of Banks in Cambodia, “Alternative data has tremendous potential for contributing to financial inclusion by complementing traditional financial data that banks have. They range from information on mobile wallet transactions to information on user behavior on digital platforms that can be utilized for risk assessment of individuals and MSMEs.” 

Most financial institutions use debt repayment history and bank and credit files to determine the creditworthiness of potential borrowers. Driven by digitalisation and developments in technologies such as data analytics and machine learning, alternative credit scoring is based on any form of non-traditional information that can provide insights into the ability and propensity of borrowers to pay back loans. Telecom and utility payment histories, as well as digital footprints and mobile data, can all be utilised to assess creditworthiness within these frameworks.

Banks in Cambodia are increasingly looking to tap alternative data for serving the unbanked and underbanked.

“Data in Cambodia is still very much fragmented and held across multiple organizations and institutions,” said Mr. Mach Chan, CEO of Phillip Bank in Cambodia. “Many people do not have formal loans from financial institutions. This makes it challenging to predict their repayment capacities. If Phillip Bank can easily assess aggregated alternative data, we can better assess a borrower’s creditworthiness based on their social and behavioral indicators, and spending patterns and habits. This allows us to form a more complete picture of the borrower’s risk profile, with opportunities to offer cheaper loans to less risky customers, regardless of whether they are banked. Additionally, many SMEs are not formally registered making lending a challenge. If banks can access the payments data of these MSMEs, the financial Industry will be more confident to support the needs of these businesses.”

Across Southeast Asia, governments, banks and key stakeholders are becoming increasingly interested in the potential of alternative data as a tool to expand the scope and accessibility of financial services.

A Southeast Asia-focused report published by the World Bank Group in 2021 highlights four new data types that have emerged as part of the evolving digital ecosystem, and which can aid credit decision-making: mobile operator and app-based data, digital payments, e-commerce data and enterprise-tech (business-performance) data. Such alternative data has also been highlighted by the Asian Development Bank as one of the key areas for driving financial inclusion in Southeast Asia. 

Across the region, governments, banks and key stakeholders are becoming increasingly interested in the potential of alternative data as a tool to expand the scope and accessibility of financial services.

In December 2022, the National Credit Bureau of Thailand announced the plan to launch a non-credit data centre by consolidating such data into NCB’s existing credit database with initial application of utility payment data from Electricity and Water Utilities.

In Indonesia, Experian collaborated with a telecom company to uplift financial inclusion by using data from telco to provide advanced credit assessment to empower unbanked and underbanked.

In the Philippines, Credit Information Centre (CIC) is working on an open policy to enable accessing entities to utilize credit bureau data with alternative data to come up with a complete picture of a borrower’s credit profile.

In the context of Cambodia, utility bill payment and telco payment data can serve as important sources of alternative credit data. Moreover, with rapid digitalization along with adoption of digital payments, there should be enormous potential to tap a wide array of alternative data on payments and digital footprints. Around the world, such data have served as key drivers for digital financial inclusion. 

With a rise in digital financial service providers, digital payment catalysts and e-commerce in Cambodia, massive amounts of alternative data are already generated at present. Given this scenario, it is important to have an organized ecosystem to collect, process and utilize such alternative credit data.

On the regulatory front, the National Bank of Cambodia revised the prakas on credit reporting in 2020, enabling Credit Bureau Cambodia (CBC) to collect alternative data along with traditional credit data to support financial institutions to strengthen credit risk assessment capabilities.  

CBC was established in 2012 with the support of the National Bank of Cambodia, the Association of Banks   in Cambodia and other key stakeholders in the sector to manage a fair and transparent credit market in support of the nation’s economic development. Since then, CBC has become the leading body providing financial information in the country. Although currently CBC only manages traditional data reported by member banks and financial institutions, it is preparing an ambitious roadmap to collaborate with multiple sectors in the country. Its plan is to establish a comprehensive alternative credit data ecosystem that can work together with the traditional credit data ecosystem for social and economic benefits to Cambodians.

“I would say Cambodia stands a decade ahead of other emerging market economies because of the Credit Bureau and the lending environment,” explained Gordon Peters, co-founder and CEO of fintech firm Boost, which harnesses popular social media platform such as Facebook and Telegram to enable access to finance. “CBC has done a great job of collecting, collating and sharing data on the financial lives of customers,” he said. “I think that is a huge unlock.”

For Peters and company, CBC establishes a level of legitimacy and security that has benefited Cambodia’s financial sector and allowed his firm to fill a gap in the ecosystem. Banks and financial institutions have a high degree of confidence and trust in the role of CBC as a key financial data infrastructure in the country. For a company that already manages credit history data of more than 7 million individuals and businesses, expanding the capabilities to manage alternative data reporting system looks plausible.

Ms. Phal-Chalm Theany, Secretary General of the Association of Banks in Cambodia

Ms. Theany elaborated: “CBC is a data centre for the financial sector that collects data from banks and financial institutions, stores and analyses them for the purposes of credit scoring for those financial institutions. Where each bank and financial institution may have its own data, CBC has the financial information for the whole sector.

“With strong capabilities in data analytics, artificial intelligence and machine learning, CBC is uniquely positioned to harness alternative data from diverse data sources to enable banks and financial institutions to conduct better assessment of the profile of the unbanked (mainly women and farmers) and informal small businesses, estimate income with more precision. This shall enable financial institutions to offer more appropriate credits or other financial services in the absence of a financial footprint, credit histories or property guarantees.”

Mr. Chan added: “CBC could spearhead the aggregation of payments, telco and utilities data. These datasets are then fed into a prospective customer’s credit score. Over the past few years, with NBC’s Bakong as a key enabler, we’ve seen a rapid digitization of payments. We believe that when assessing customer creditworthiness, payments data is just as important as borrowing and repayment data, and should be prioritized. At the same time, CBC would need to seek the cooperation of their member financial institutions to provide these datasets. For SMEs, we also see data from GDT as an important asset. If CBC could connect and obtain data with GDT, it will allow the banks to form better assessments for clean loans, spurring economic activity.”

Currently, CBC provides K-Score, an algorithmic credit score (ACS). ACS uses machine-learning algorithms to analyse massive data sets to produce credit scores without traditional financial information. This is the only industry level credit score available in Cambodia. First launched in 2015, CBC did a major revamp of the algorithms in 2020 to keep up with the evolving changes in the market landscape. Today, K-Score is available to all member financial institutions of CBC and (via CBC’s mobile app) to all individuals as well.

Example of a K-Score from CBC

A 2023 report in the Asian Journal of Law and Science states: “ACS is the tip of the spear of the global campaign for financial inclusion, which aims at including unbanked and underbanked citizens in financial markets and delivering them financial services, including credit, at fair and affordable prices.” The study outlines the wide ranging benefits of ACS and alternative data as tools to benefit individuals across Southeast Asia who lack access to financial services.

In the Cambodian context, Credit Bureau of Cambodia is well positioned to lead the way in leveraging these tools. To make sense of the massive datasets now available thanks to digitalisation, CBC utilises a host of ACS tools. Machine-learning algorithms and other artificial intelligence mechanisms allow for the analysis of data at a scale that was previously impossible. Risk analysis profiles and loan portfolios that are regularly updated and refined are just a couple of the ways these technologies can be leveraged using alternative data. While the power of these tools is certainly important, CBC’s experience in the sector — and its standing as the leading institution managing, analysing and providing financial data — are the most compelling reasons for the adoption of alternative data schemes in Cambodia.

“As we are entering our second decade of credit reporting in Cambodia, CBC is committed to being a trusted (element in the) national financial infrastructure for providing alternative credit data, to strengthen credit risk assessment for our 190-plus member financial institutions, and to expand access to credit for the new-to-credit consumer segments. We are very open to collaborate with alternative data providers such as telcos, utilities and payment service providers to harness information not found in traditional credit reports, to help more Cambodians obtain access to mainstream financial services,” explained CBC CEO, Oeur Sothearoath.

As CBC leverages its established presence in the financial sector, a growing pool of innovators is working with the agency to develop and facilitate the alternative data ecosystem.

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Two blockchain firms to be added to MAS’ licensing list | FinanceAsia

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Two crypto firms have recently announced that they have obtained in-principle approval (IPA) from the Monetary Authority of Singapore (MAS) to provide digital asset-related offerings compliant with the watchdog’s requirements.

Through the licensing scheme under the city state’s Payment Services Act, MAS regulates seven types of payment services, including account issuance, domestic money transfer, cross-border money transfer, merchant acquisition, e-money issuance, digital payment tokens and money-changing.

Singapore-headquartered StraitsX acquired its licence as a major payment institution (MPI) for digital payment token services, while Taiwan-based XREX’s Singapore entity received approval covering six service categories except for money-changing services.

Upon receiving the licence, StraitsX will focus on issuing two single-currency pegged stablecoins (SCS) that are 1-1 pegged to Singapore dollars (XSGD) and US dollars (XUSD), respectively.

XSGD is currently available for minting and redemption via StraitsX’s platform, while XUSD is under development and will be released to the public in the near future, FinanceAsia has learned..

“The in-principle approval from  the MAS allows us to demonstrate compliance with the regulatory framework for stablecoin issuance,” Kenny Chan, head of StraitsX, said.

“We see potential in single-currency pegged stablecoins as a credible and reliable medium to facilitate innovations in payment transactions both domestically and across borders,” he added.

Citing the purpose bound money (PBM) testing led by MAS as an example, Chan emphasised the programmability and interoperability of stablecoin-powered payment solutions and explored use cases, including programmable rewards and escrow arrangements for online commerce.

“Stablecoins play a significant role in the digital asset ecosystem as they frequently form the bridge to the fiat leg of a transaction,” said Etelka Bogardi, Asia head of fintech and financial services regulatory, partner at Norton Rose Fulbright.

“It was therefore important to safeguard financial stability and consumer protection in this space.”

She added that as one of the frontrunners in stablecoin regulation, Singapore’s licencing regime has introduced important safeguards through reserve management and redemption mechanics requirements.

The MAS is also expected to introduce a regulatory framework under the Payment Services Act, which will be dedicated to stablecoin-related issuance and intermediation activities. The framework is set to be finalised in Augustafter a public consultation which started in October 2022.

“We believe that the regulatory clarity provided in the finalised framework, as well as Singapore’s position as a trusted hub for global business will provide a strong foundation for the issuance of stablecoins pegged to other G10 currencies,” Chan remarked.

Blockchain benefit

XREX’s business focusses on blockchain-based cross-border payment technology. The Taiwan-based team will useXREX Singapore as their Asia Pacific (Apac) headquarters, and look to expand its payment product that supports fiats, stablecoins and cryptocurrencies in the region.

Christopher Chye, chief executive officer (CEO) at XREX Singapore, told FA that the approval process took approximately two years’ , which he referred to as “hard fought” in a company press release. The team is looking to elevate the in-principle approval to a full licence over the next six months, he added.

“Blockchain technology has the potential to decimate transaction fees, facilitate atomic settlement and enable programmable money,” he said.

Moreover, he addted that “stablecoins are particularly well-positioned to bring respite to illiquidity issues, and we look forward to acquiescing our customers and prospects to the use of stablecoins in the imminent future.”

The XREX Group team claims to be the only digital asset player approved by both Singaporean and Taiwanese regulators to provide virtual asset services, according to the note.

Chye said that the compliance team has been studying the licensing regime formalised in the United Arab Emirates (UAE) and closely following regulatory developments in Hong Kong.

“Singapore boasts a progressive and robust regulatory framework, offering our users the clarity and confidence they need to access digital assets and use stablecoins,” said XREX Group and XREX Singapore head of compliance, Nick Chang, in the statement.

Chye added: “We feel optimistic about the regulatory developments across various jurisdictions and the attention central banks have afforded to this. Clear, reasonable, and practical regulations are crucial for the development of the blockchain industry.”

¬ Haymarket Media Limited. All rights reserved.

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Two blockchain firms to be added to MAS’s licensing list | FinanceAsia

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In: Asia, Finance, South-East Asia

Two crypto firms have recently announced that they have obtained in-principle approval (IPA) from the Monetary Authority of Singapore (MAS) to provide digital asset-related offerings compliant with the watchdog’s requirements.

Through the licensing scheme under the city state’s Payment Services Act, MAS regulates seven types of payment services, including account issuance, domestic money transfer, cross-border money transfer, merchant acquisition, e-money issuance, digital payment tokens and money-changing.

Singapore-headquartered StraitsX acquired its licence as a major payment institution (MPI) for digital payment token services, while Taiwan-based XREX’s Singapore entity received approval covering six service categories except for money-changing services.

Upon receiving the licence, StraitsX will focus on issuing two single-currency pegged stablecoins (SCS) that are 1-1 pegged to Singapore dollars (XSGD) and US dollars (XUSD), respectively.

XSGD is currently available for minting and redemption via StraitsX’s platform, while XUSD is under development and will be released to the public in the near future, FinanceAsia has learned..

“The in-principle approval from  the MAS allows us to demonstrate compliance with the regulatory framework for stablecoin issuance,” Kenny Chan, head of StraitsX, said.

“We see potential in single-currency pegged stablecoins as a credible and reliable medium to facilitate innovations in payment transactions both domestically and across borders,” he added.

Citing the purpose bound money (PBM) testing led by MAS as an example, Chan emphasised the programmability and interoperability of stablecoin-powered payment solutions and explored use cases, including programmable rewards and escrow arrangements for online commerce.

“Stablecoins play a significant role in the digital asset ecosystem as they frequently form the bridge to the fiat leg of a transaction,” said Etelka Bogardi, Asia head of fintech and financial services regulatory, partner at Norton Rose Fulbright.

“It was therefore important to safeguard financial stability and consumer protection in this space.”

She added that as one of the frontrunners in stablecoin regulation, Singapore’s licencing regime has introduced important safeguards through reserve management and redemption mechanics requirements.

The MAS is also expected to introduce a regulatory framework under the Payment Services Act, which will be dedicated to stablecoin-related issuance and intermediation activities. The framework is set to be finalised in Augustafter a public consultation which started in October 2022.

“We believe that the regulatory clarity provided in the finalised framework, as well as Singapore’s position as a trusted hub for global business will provide a strong foundation for the issuance of stablecoins pegged to other G10 currencies,” Chan remarked.

Blockchain benefit

XREX’s business focusses on blockchain-based cross-border payment technology. The Taiwan-based team will useXREX Singapore as their Asia Pacific (Apac) headquarters, and look to expand its payment product that supports fiats, stablecoins and cryptocurrencies in the region.

Christopher Chye, chief executive officer (CEO) at XREX Singapore, told FA that the approval process took approximately two years’ , which he referred to as “hard fought” in a company press release. The team is looking to elevate the in-principle approval to a full licence over the next six months, he added.

“Blockchain technology has the potential to decimate transaction fees, facilitate atomic settlement and enable programmable money,” he said.

Moreover, he addted that “stablecoins are particularly well-positioned to bring respite to illiquidity issues, and we look forward to acquiescing our customers and prospects to the use of stablecoins in the imminent future.”

The XREX Group team claims to be the only digital asset player approved by both Singaporean and Taiwanese regulators to provide virtual asset services, according to the note.

Chye said that the compliance team has been studying the licensing regime formalised in the United Arab Emirates (UAE) and closely following regulatory developments in Hong Kong.

“Singapore boasts a progressive and robust regulatory framework, offering our users the clarity and confidence they need to access digital assets and use stablecoins,” said XREX Group and XREX Singapore head of compliance, Nick Chang, in the statement.

Chye added: “We feel optimistic about the regulatory developments across various jurisdictions and the attention central banks have afforded to this. Clear, reasonable, and practical regulations are crucial for the development of the blockchain industry.”

¬ Haymarket Media Limited. All rights reserved.

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Chinese official warns money laundering, online scams outpacing capacity for containment

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In: Asia

Various financial crimes, including telecoms scams, online gambling and underground banks, are becoming more tightly intertwined with money laundering and pose new challenges for the country, Wang said. “The amounts involved in the cases continue to rise, and financial risks are gradually increasing,” he noted. However, Chinese financial institutions generallyContinue Reading

Cyber money heist: Why companies paying off hackers fuels ransomware crimes

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In: South-East Asia

80 PER CENT OF VICTIMS PAY RANSOM

Analysts told CNA that it is common for companies to pay up in a bid to protect their data, with Forbes reporting about 80 per cent of 1,200 victims surveyed decided to do so.

More than 72 per cent of businesses were affected by ransomware attacks as of 2023, Mr Backer told CNA, noting that it was an increase from the previous five years and was by far the highest figure reported.

Predictions also indicate ransomware will cost victims roughly $265 billion annually by 2031, he added.

“In the heat of the moment and with pressures mounting, the decision to pay a ransom is definitely not an easy one,” said Mr Flores.

“Many choose to opt for this route for a few reasons, with the most common one being faster recovery time. With business operations and continuity at stake, paying the ransom and obtaining the decryption tool in return is sometimes the quicker option to resume activity.”

According to media reports in 2019, ride-hailing platform Uber allegedly paid a US$100,000 ransom and had the hackers sign non-disclosure agreements in exchange for the payment.

This shows that organisations are worried, noted Mr Backer.

Regarding banks like ICBC paying ransoms, he said such information is not usually disclosed to the public due to the sensitive nature of the incidents.

“Many organisations, including banks, may not disclose this due to concerns about reputation, legal implications, and the encouragement of further attacks.”

However, Dr Kerrison noted that the intention behind companies paying ransoms “might not always be to keep it a secret”. 

“Rather, it’s the best option available to them in the circumstances,” he said.

Mr Backer added that claims by attackers should be “treated with caution” as they might not always accurately reflect the reality of the situation.

Analysts also told CNA the rise of the ransomware-as-a-service (RaaS) model is one of the driving factors in the increase in ransom payment.

“RaaS made it possible for low-skilled cybercriminals to join the illicit industry ultimately contributing to the surge in the number of victims,” said He Feixiang, an adversary intelligence research lead at Group-IB.

The RaaS business model allows individuals to develop and distribute ransomware, paying the affiliates for successful attacks using their ransomware, he noted.

In addition, analysts said collaborations among ransomware groups, encryption-less attacks and cryptocurrency services also allow more hackers to target companies and facilitate their movements, driving up the number of ransom cases.

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Cyber money heist: Why companies paying off hackers fuels the ransomware industry

By:
On:
In: South-East Asia

80 PER CENT OF VICTIMS PAY RANSOM

Analysts told CNA that it is common for companies to pay up in a bid to protect their data, with Forbes reporting about 80 per cent of 1,200 victims surveyed decided to do so.

More than 72 per cent of businesses were affected by ransomware attacks as of 2023, Mr Backer told CNA, noting that it was an increase from the previous five years and was by far the highest figure reported.

Predictions also indicate ransomware will cost victims roughly $265 billion annually by 2031, he added.

“In the heat of the moment and with pressures mounting, the decision to pay a ransom is definitely not an easy one,” said Mr Flores.

“Many choose to opt for this route for a few reasons, with the most common one being faster recovery time. With business operations and continuity at stake, paying the ransom and obtaining the decryption tool in return is sometimes the quicker option to resume activity.”

According to media reports in 2019, ride-hailing platform Uber allegedly paid a US$100,000 ransom and had the hackers sign non-disclosure agreements in exchange for the payment.

This shows that organisations are worried, noted Mr Backer.

Regarding banks like ICBC paying ransoms, he said such information is not usually disclosed to the public due to the sensitive nature of the incidents.

“Many organisations, including banks, may not disclose this due to concerns about reputation, legal implications, and the encouragement of further attacks.”

However, Dr Kerrison noted that the intention behind companies paying ransoms “might not always be to keep it a secret”. 

“Rather, it’s the best option available to them in the circumstances,” he said.

Mr Backer added that claims by attackers should be “treated with caution” as they might not always accurately reflect the reality of the situation.

Analysts also told CNA the rise of the ransomware-as-a-service (RaaS) model is one of the driving factors in the increase in ransom payment.

“RaaS made it possible for low-skilled cybercriminals to join the illicit industry ultimately contributing to the surge in the number of victims,” said He Feixiang, an adversary intelligence research lead at Group-IB.

The RaaS business model allows individuals to develop and distribute ransomware, paying the affiliates for successful attacks using their ransomware, he noted.

In addition, analysts said collaborations among ransomware groups, encryption-less attacks and cryptocurrency services also allow more hackers to target companies and facilitate their movements, driving up the number of ransom cases.

Continue Reading