The second quarter of 2024 saw record stablecoin payments in Singapore, showing an over 5,000% surge compared to the same period last year.

As reported by Bloomberg News, the blockchain analytics firm Chainalysis recorded almost $1 billion in payments using stablecoins in Singapore in Q2 2024.

For comparison, the volume of stablecoin payments in Singapore stood at $489 million in Q1 2024 and only about $161 million in total in the second half of 2023. In Q2 2023, stablecoin payments in Singapore contributed to a mere $18,5 million. The impressive growth was mostly fueled by transactions at merchant outlets, noted the report.

Stablecoin is a digital asset backed by a more traditional financial investment tool with a less volatile nature. Stablecoins can be pegged to any fiat currency, foreign-exchange-traded commodities, precious or industrial metals, etc. Some stablecoins are backed by other crypto assets.

Typically, fiat-backed stablecoins are backed at a 1:1 ratio, meaning that one stablecoin is equal to one unit of a certain fiat currency. The most popular stablecoins are pegged to the US dollar. Euro and GBP are also emerging as collateral. Unlike all other cryptocurrencies, the value of stablecoins cannot shift from $5 to $500 overnight, making them an attractive payment means.

Businesses use the stablecoin tokens because of their “efficiency and low cost,” noted Chainalysis Cybercrimes Research Lead Eric Jardine.

In recent times, Singapore has emerged as a leading cryptocurrency hub in Southeast Asia for both retail and institutional investors. One of the key factors contributing to that prominent position is its progressive and well-defined regulatory framework for digital assets. Thus, MAS licensing requirements for crypto service providers promote transparency and consumer protection. Notably, 40% of Singaporean investors have either owned or currently hold cryptocurrencies in their portfolios.

Nevertheless, stablecoin payments remain a relatively small share of total payment flows in Singapore. To compare, retail card payments in Singapore were worth $56.2 billion in the second half of last year.