INTRODUCTION Contributed by: Adrian Ang, Allen & Gledhill LLP
commodities, stocks and even cryptocurrencies on the same unified platform. We would expect these Super App platforms to grow in sophisti - cation in 2025. Growth in Cross-Border Transactions As a corollary, most fintech businesses centre their value propositions around their ability to process many transactions quickly and cheaply, whether domestically or on a cross-border basis. In particular, fintechs have made great strides over the last few years in increasing settlement speeds for cross-border transactions. Among other developments in the sophistica - tion of payment and settlement flows, fintechs have adopted “nostro-vostro” arrangements. For example, where a customer in Singapore wishes to make payment to a merchant in Sweden and pays the Singapore dollar into a Singapore account of the fintech, a traditional cross-border payment flow would involve that Singapore dollar being transferred through vari - ous intermediary payment service providers and correspondent banks, being converted to the Swedish krona, and arriving finally at the fin - tech’s Swedish account. This is contrasted with an arrangement where, once the customer pays Singapore dollar into the fintech’s Singapore account, transactions from other customers paying the same merchant are aggregated during the day, and the equiva - lent sum of Swedish krona is disbursed from the fintech’s Swedish account to the merchant on the same day. This circumvents the multiple lay - ers of intermediaries which increase the fees and time taken to effect the transaction. Stablecoins are also being used as a way to speed up the settlement of cross-border trans - actions. They represent an alternative to other
volatile cryptocurrencies. Their values may achieve such “stability” by a variety of mecha - nisms. The two most common are: • the use of algorithms to buy and sell stable - coins in reserve on the open market, in order to achieve price stability; or • the backing of stablecoins issued by fiat cur - rency-denominated reserve assets effectively “tying” the values of such “single-currency stablecoins” to the values of their reserve currencies. In any case, like other cryptocurrencies, stable - coins can typically be sent on a “peer-to-peer” basis (ie, directly from the wallet of one stable - coin holder to the wallet of another stablecoin holder). This minimises the use of intermediaries, fees and settlement timelines. Even in the example above, where the fintech acts as an intermediary to assist the Swedish merchant to collect Swedish krona from its cus - tomers in Singapore paying in Singapore dol - lars, stablecoins can act as a payment settle - ment layer, used by the fintech to transfer value from Singapore to Sweden. Customers can still pay for goods using Singapore dollars, with the fintech converting those dollars into a Singapore dollar-based single-currency stablecoin for the purposes of the cross-border transfer (ie, from the fintech’s wallet in Singapore to the fintech’s wallet in Sweden), and converting it back to Swedish krona for settlement with the merchant in Sweden. Barring issues such as blockchain network congestion or inadequate estimation of gas fees, the transfer may therefore be com - pleted in a matter of minutes. Today, some of the largest stablecoins by mar - ket capitalisation include the USD-denominated stablecoins issued by Tether and Circle. Moving
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