Singapore’s MAS Unveils Stablecoin Framework

The Monetary Authority of Singapore (MAS) has unveiled a comprehensive regulatory framework designed to ensure a robust level of value stability for stablecoins that fall under its jurisdiction. This move comes after taking into account feedback garnered from a public consultation held in October 2022.

Regulatory Approach to Stablecoin Stability

Stablecoins, a category of digital payment tokens, are engineered to uphold a consistent value against specific fiat currencies. When properly regulated to maintain such stability, stablecoins can function as trustworthy mediums of exchange, fostering innovation in areas like on-chain transactions involving digital assets.

The MAS stablecoin regulatory framework will specifically pertain to single-currency stablecoins (SCS) pegged to the Singapore Dollar or any of the G10 currencies. This applies to stablecoins issued within the confines of Singapore. Issuers of such stablecoins must fulfil several key requirements:

  1. Value Stability: The composition, valuation, custody, and audit of SCS reserve assets will be subjected to stringent criteria, offering a high degree of assurance regarding value stability.
  2. Capital: Issuers will be required to maintain a minimum base capital and sufficient liquid assets. This measure reduces the risk of insolvency and ensures an orderly winding-down process, if necessary.
  3. Redemption at Par: In case of redemption requests, issuers must return the par value of SCS to holders within five business days.
  4. Disclosure: Issuers must furnish appropriate disclosures to users, encompassing information about the mechanism employed for value stabilization, the rights of SCS holders, and the audit outcomes of reserve assets.

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Distinguishing MAS-Regulated Stablecoins

Only stablecoin issuers who adhere to all stipulated requirements can seek recognition from MAS for their stablecoins as “MAS-regulated stablecoins.” This designation enables users to easily differentiate between MAS-regulated stablecoins and other digital payment tokens, including those not subject to MAS’ regulatory framework. Any false representation of a token as an “MAS-regulated stablecoin” might result in penalties under the framework and inclusion in MAS’ Investor Alert List. Users are advised to carefully assess risks when dealing with stablecoins that do not adhere to MAS’ framework.

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Ms. Ho Hern Shin, Deputy Managing Director (Financial Supervision) at MAS, emphasized that the framework intends to foster the use of stablecoins as credible digital mediums of exchange. It seeks to bridge the gap between fiat and digital asset ecosystems. SCS issuers aiming for “MAS regulated stablecoin” recognition are encouraged to begin preparations for compliance ahead of time. This initiative highlights MAS’ commitment to a resilient and forward-looking regulatory landscape.