Singapore's MAS Introduces Stablecoin Regulation Framework

The Monetary Authority of Singapore (MAS) has revealed a new regulatory framework that will focus on maintaining a consistent value for stablecoins, bolstered by feedback from a public consultation held in October 2022.

What are Stablecoins?

Stablecoins are designed to maintain a fixed value against specific fiat currencies, can be a reliable means of exchange when properly regulated.

This supports innovations like purchasing and selling digital assets directly on the blockchain.

New MAS Regulations for Single Currency Stablecoins (SCS)

MAS' regulatory framework applies to SCS tied to the Singapore Dollar or select G10 currencies.

These must be issued in Singapore.

SCS reserve assets need to adhere to rules concerning their composition, valuation, custody, and auditing. This ensures a strong assurance of value stability.

Issuers must maintain a minimum base capital and liquid assets, reducing insolvency risks and enabling a smooth business wind-down if needed.

Issuers must return the SCS's par value to holders within five business days upon redemption requests.

That notwithstanding, issuers need to provide users with suitable disclosures, covering details about the SCS's value-stabilizing mechanism, rights of SCS holders, and audit outcomes of reserve assets.

Only stablecoin issuers fully meeting these framework requirements can apply to MAS for their stablecoins to gain recognition as "MAS-regulated stablecoins."

This label will help users distinguish between regulated stablecoins and other digital payment tokens, which aren't governed by MAS' framework.

Misrepresenting a token as an "MAS-regulated stablecoin" can lead to penalties under MAS' stablecoin regulatory rules, and individuals might be added to MAS' Investor Alert List. Users should assess risks before dealing with stablecoins not regulated by MAS.

Ms. Ho Hern Shin, Deputy Managing Director (Financial Supervision) at MAS, noted:

"The stablecoin regulatory framework by MAS aims to support the use of stablecoins as a credible digital medium of exchange and a link between fiat and digital asset ecosystems. We urge SCS issuers seeking recognition as 'MAS regulated stablecoins' to prepare for compliance in advance."