Singapore has long positioned itself as a leading financial hub in Asia, balancing innovation with regulation. As digital assets move into the mainstream, one of the fastest-growing instruments is the stablecoin—cryptocurrencies pegged to stable assets like the US dollar. For Singaporean investors, stablecoins represent not just a technological novelty but a practical tool for payments, remittances, diversification, and investment access.
This article explores the history and advantages of stablecoins, their role in the global and local economy, their investment value, the risks involved, and what they mean for individual investors in Singapore.
1. The History and Advantages of Stablecoins
Stablecoins emerged to fix a simple problem: Bitcoin and Ethereum were too volatile for everyday use. While Bitcoin is hailed as “digital gold,” its annualised volatility is nearly five times that of stocks, making it unsuitable as a transaction currency.
The first widely adopted stablecoin, Tether (USDT), was launched in 2014, pegged to the US dollar at 1:1. This created a crypto-native “digital dollar” that retained stability but was transferable on blockchain rails. Over time, USDC, DAI, and other stablecoins entered the market, offering varying levels of transparency and regulation.
As of 2025:
- Over 250 stablecoins circulate globally.
- Total market capitalisation exceeds USD 260 billion.
- Annual transaction volumes surpass USD 30 trillion, exceeding Mastercard and Visa combined.
For Singapore-based investors, the appeal is clear: stablecoins combine the trust of the US dollar with the speed and efficiency of blockchain, providing a unique blend of stability and flexibility.
2. The Role of Stablecoins
Stablecoins now serve multiple functions that span digital and traditional finance:
a. Payments and Settlement in Singapore
Stablecoins are increasingly used in retail and corporate payments. For instance, Metro Department Store in Singapore accepts USDT for cross-border customers. Payment processors such as Stripe and local fintechs are beginning to integrate stablecoins into settlement systems, reducing transaction fees and improving efficiency.
For Singaporean investors with families overseas—say, remittances to Malaysia, the Philippines, or India—stablecoins cut costs dramatically. A transfer that once took days and cost 3–5% of the amount can now be completed in minutes for 0.1% or less.
b. Store of Value in a Strong-Currency Market
While Singaporeans benefit from a relatively stable Singapore dollar, holding some assets in digital US dollars through stablecoins can be a hedge against SGD depreciation during global shocks. In emerging markets like Argentina or Turkey, stablecoins are already widely used for this purpose. Singaporeans may not face runaway inflation, but stablecoins can still provide diversified currency exposure.
c. Bridging Traditional Finance and DeFi
For local investors exploring decentralised finance (DeFi), stablecoins are the entry point. They can be used to lend, borrow, or earn yield in DeFi protocols. By mid-2025, more than USD 80 billion of stablecoins are locked in DeFi ecosystems. Singapore’s progressive regulatory stance means that, over time, DeFi strategies could become more accessible through regulated channels.
3. The Investment Value of Stablecoins
Unlike Bitcoin or equities, stablecoins are not growth assets. They are pegged to fiat currencies, most commonly the US dollar. Holding them will not generate capital gains by itself.
However, for Singaporean investors, the investment value lies in functionality and access:
• Safe harbour: In times of crypto volatility, stablecoins are a refuge without cashing out into SGD.
• Gateway asset: Many offshore investment products—tokenised US Treasuries, digital real estate funds, or on-chain money market funds—require USDC or USDT for entry.
• Liquidity tool: Stablecoins make it easy to rebalance between asset classes quickly.
In short, stablecoins should be seen as infrastructure, not a speculative bet. They enable participation in global opportunities, including those outside Singapore’s traditional banking rails.
4. Risks of Owning Stablecoins
Despite their stability, stablecoins carry risks investors must consider:
a. Custodial Risk
If you store stablecoins on a centralised exchange, you are exposed to platform risk. The collapse of FTX in 2022 froze billions of customer assets, including USDT. For Singaporean investors, the lesson is clear: always use regulated exchanges or move assets into self-custody wallets.
b. Regulatory Risk
Regulations differ sharply across countries. In July 2025, the US enacted the GENIUS Act, giving stablecoins federal legitimacy but also strict compliance obligations. In Singapore, the Monetary Authority of Singapore (MAS) has proposed a licensing regime for stablecoin issuers, requiring full backing and redemption rights. This means that only a handful of regulated issuers may be permitted to operate locally.
c. Market and De-pegging Risk
Stablecoins can temporarily “break the peg.” USDC fell to USD 0.88 in 2023 during the Silicon Valley Bank collapse. USDT has also traded below par during crises. Although pegs are usually restored, this risk matters for those relying on stablecoins for near-term liquidity.
d. Interest Rate Dependence
Stablecoin issuers invest reserves in US Treasuries. If global interest rates fall, their profitability declines, which could weaken confidence in their long-term sustainability.
5. Implications for Singaporean Investors
a. A Liquidity Tool, Not a Growth Asset
For retail investors in Singapore, stablecoins should be seen as digital cash equivalents. They are not a path to capital appreciation, but a flexible tool to move in and out of asset classes.
b. Access to Global Markets
Stablecoins can act as a passport to participate in tokenised assets abroad—whether that’s a US fund, tokenised government bonds, or DeFi protocols. This is especially useful for Singaporeans looking to diversify internationally without dealing with capital controls (which they don’t face at home, but which matter when accessing offshore platforms).
c. Hedging FX and Wealth Planning
For high-net-worth individuals and family offices in Singapore, stablecoins can serve as a hedge against SGD/USD fluctuations. They can also facilitate offshore wealth management, especially when used to subscribe to dollar-denominated funds or assets.
d. Looking Ahead: SGD or RMB Stablecoins
Globally, the US dollar dominates stablecoins, but Singapore is positioning itself as a regulatory hub. MAS is testing frameworks that could eventually support a Singapore dollar-pegged stablecoin for domestic use, or even a Hong Kong–issued RMB stablecoin for cross-border trade. For individual investors, this means more choice and optionality in the coming years.
Conclusion
For Singaporean investors, stablecoins are best understood not as “crypto investments” but as financial infrastructure. They combine the efficiency of blockchain with the stability of the US dollar (and, potentially, the SGD or RMB in the future).
For investors who are keen to explore stablecoins, it is important to first recognise that they are not growth assets. They are tools that can support broader life and financial objectives, such as providing liquidity, hedging currency exposure, or accessing global investment opportunities—but they should not form the core of your portfolio or be relied upon for long-term wealth accumulation.
Used thoughtfully and cautiously, stablecoins can serve as hedging instruments and gateways to global investment opportunities. The emphasis should always remain on using regulated issuers, avoiding overreliance, and being aware of risks such as de-pegging and regulatory changes, rather than treating them as a substitute for fundamental financial planning or as tools to reaching your life goals.
In a city that thrives on global connectivity and financial innovation, stablecoins could become as integral as credit cards and PayNow—quietly powering certain aspects of cross-border investing for Singaporeans.
This is an original article written by Dr Peng Chen, Senior Advisor and Director at Providend, Southeast Asia’s first fee-only comprehensive wealth advisory firm.
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