Hong Kong’s push to regulate cryptocurrency stablecoins could take cues from Singapore, where the homegrown XSGD token is emerging as a potential model for cross-border payments and compliance.
XSGD is currently the only stablecoin backed by the Singapore dollar and is one of the largest non-US dollar stablecoins in circulation. Its issuer, StraitsX, believes its strict compliance with local rules and focus on cross-border payments could offer useful lessons for Hong Kong, which is preparing to issue its first stablecoin licences next year.
Speaking with the South China Morning Post during Token2049 in Singapore, StraitsX CEO Liu Tianwei said the company is working closely with regulators and traditional banks to support cross-border transactions. “It’s quite easy not to be legal,” Liu said at the conference, which has become one of the largest gatherings in the cryptocurrency industry. “If you want to get it done, you really need to do it in the right spectrum.”
Liu said that strong ties with the banking sector remain essential for any stablecoin project. Even as the technology moves quickly, stablecoins still rely on banks and payment networks for backing and redemptions. The cooperation, he said, is key to ensuring both stability and trust.
His view contrasts with that of Donald Trump Jr., the co-founder of World Liberty Financial and son of the US president, who has been promoting USD1 – a stablecoin backed by US Treasuries – as a tool to “dollarise” global finance. Liu, meanwhile, sees stablecoins as complementary to existing systems, not a threat. He believes they can make cross-border settlements faster and more efficient, but they are “definitely not” meant to undermine central banks.
To illustrate, Liu pointed to something as ordinary as buying coffee. A Hong Kong cardholder can tap their card at a Starbucks in Singapore and have the transaction approved instantly. But behind the scenes, the actual settlement can take between much longer through traditional banking channels like Swift. Using stablecoins could speed that up dramatically, he said.
The global dominance of US dollar-pegged stablecoins has complicated matters for financial hubs such as Singapore and Hong Kong, which are trying to build their own frameworks. Hong Kong’s stablecoin law, which came into effect in August, lays the groundwork for licensing and oversight, with the first licences expected to be issued in early 2026.
Singapore, for now, has a slight head start. XSGD has been tied to the Singapore dollar since 2020, and just this week, it began trading on Coinbase. That could make it a new pricing unit for Bitcoin, ether, and other digital assets, giving it a bigger role in the broader cryptocurrency market.
Stablecoins are digital tokens designed to hold a steady value by being pegged to a fiat currency, like the US dollar. Unlike other cryptocurrencies, they are less prone to wild price swings, which makes them useful for payments and settlements – especially in borders.
(Photo by Pierre Borthiry – Peiobty)
See also: US SEC weighs tokenised stock trading on cryptocurrency exchanges
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