Crypto custodian BitGo plans to launch a dollar-backed stablecoin next year, offering rewards to liquidity providers.

BitGo is set to launch a dollar-backed stablecoin dubbed USDS in January 2025, positioning it as the first “open-participation stablecoin” in the market. In a Sept. 18 post on X, BitGo said the stablecoin is “fully backed by short-duration T-bills, overnight repos, and cash, ensuring high liquidity and low risk with real-time proof of reserves.”

BitGo aims to stand out by offering liquidity providers a share of the returns generated from its reserves, creating a new incentive model in a market currently dominated by Tether’s (USDT) and Circle’s USD Coin (USDC).

The move comes as BitGo, which holds a dominant 96.6% market share in the Wrapped Bitcoin market with its wBTC token, faces increasing competition from new entrants like Coinbase. On Sept. 12, Coinbase launched cbBTC, a new ERC20 token backed 1:1 by Bitcoin held in Coinbase’s custody. The token is available on the Base and Ethereum networks, signaling a direct challenge to BitGo’s market leadership.

In the meantime, some decentralized finance protocols are reevaluating their use of wBTC due to concerns over its affiliations with TRON founder Justin Sun. Sky, formerly known as MakerDAO, is now considering whether it should remove wBTC as collateral from its borrowing platform SparkLend due to BitGo’s impending partnership with BitGlobal, which is perceived as potentially shifting control of wBTC to a venture associated with Sun.

California-based digital asset trust and security company BitGo has received a Major Payment Institution license from the Monetary Authority of Singapore.

The company made the announcement on Aug. 8, stating that the MPI license allows it to offer regulated crypto payment services in Singapore, including custody and trading.

Following the approval, BitGo’s Singapore clients will be able to buy and sell crypto from the company’s cold storage custody solutions. Additionally, according to BitGo, the services will include access to its liquidity as well as insured cold storage custody solutions.

BitGo’s acquisition of the MPI license comes only days after HashKey Group’s over-the-counter trading subsidiary received similar approval from the Singapore regulator. It also comes about six months after BitGo obtained an initial in-principle approval as an MPI. 

The crypto custodian now joins 27 other digital asset companies, including Coinbase and Ripple (XRP), which have already secured full MPI licenses to offer crypto services in the city state.

Singapore has tried to build a strong regulatory framework for crypto, primarily overseen by MAS. They include the enactment of the Payment Services Act in 2019, as well as rules restricting digital payment providers from promoting their services to the general public. 

Crypto ownership in the tiny Asian country is one of the highest in the world. According to a recent report from global crypto payments provider Triple-A, more than 24% of Singaporeans owned some form of crypto. It puts the country only second to the United Arab Emirates in terms of crypto ownership, with 25.3% of the Middle-Eastern country’s citizenry holding crypto.

Per the report, the United States is much further behind, with only 15.5% of its population holding digital assets. However, unlike Singapore, crypto regulation in the U.S. is still not as clear cut, with the country’s regulator, the U.S. Securities and Exchange Commission accused of hampering the growth of the industry through its hard stance on crypto.