The Diem Association has now applied to FINMA in Switzerland. Now it is just waiting for FINMA's approval, which may be approved as early as January 2021. The first stablecoin that Diem plans to issue will be a USD-based stablecoin. After the issuance of the USD-based stablecoin, Diem's second digital stablecoin is likely to be based on Singapore dollars.
According to Diem's original stablecoins design, it targets a basket of fiat currencies including five currencies, covering 50% of US dollars, 18% of Euros, 14% of Japanese yen, 11% of British pounds, and 7% of Singapore dollars. Following the Diem Association issues USD-based stablecoin, the next one should be Euro-based. But in my opinion, the second digital stablecoin issued by Diem is likely to be based on Singapore dollars. For the Diem Association, it should be a better choice to be the first to issue a stablecoin based on Singapore dollars.
The European Union has always held a vigilant and opposed attitude towards the Diem Association. The German Finance Minister publicly opposes the issuance of digital currency by private institutions, and believes that the right to issue digital currency should be controlled by European banks. I believe that so far, Diem's strategy of issuing stablecoins is also to issue the next Diem stablecoin based on Euros. The change of its name is to emphasize the neutrality of Diem and a means to gain support from the EU. But now it seems that issuing Diem's stablecoin based on Euros will be a very big challenge, while issuing stablecoins based on Singapore dollars has greater feasibility and greater benefits.
The Singapore government is very friendly to the development of crypto digital finance. Its homeland not only boasts startup firms in the field of crypto digital finance, but also attracts firms outside Singapore to start businesses or operate in Singapore. For example, the Swiss crpyto digital bank and the Swiss digital asset exchange SDX have established operating institutions in Singapore to take advantage of the local policy and expand the market in this region.
Similarly, if the association issues a Singapore dollar-based Diem stablecoin here, its feasibility is much greater than the current issue of a Euro-based stablecoin in Singapore. What's more, there are already issuers that issue stablecoins based on Singapore dollars.
Singapore's unique geographical location is also very suitable for issuing stablecoins. The economic and trade exchanges between countries in Southeast Asia are increasing, so a more effective cross-border payments method is needed. A generally accepted stablecoin will be very beneficial to the economic and trade exchanges in this region. If the association enters this market firstly, it will gain first-mover advantage. Especially due to currency network effects, this first-mover advantage is even more important.