The Monetary Authority of Singapore (MAS) has launched a new set of regulatory framework for stablecoins. It is aimed at ensuring a “high degree of value stability” for single-currency stablecoins (SCS) regulated in the country.
The curation of the new set of rules have been done taking into consideration the feedback received following an October 2022 public consultation. It will apply to single-currency stablecoins (SCS) that are pegged to the Singapore Dollar or any G10 currency issued in Singapore.
The issuers of SCS will have to fulfil key requirements relating to value stability, minimum base capital and liquid assets, redemption at par and disclosure.
The MAS believes that these digital payment tokens, when well-regulated to preserve value stability, can serve as a “trusted medium of exchange to support innovation”. This also includes the “on-chain” purchase and sale of digital assets.
The latest move will facilitate the use of stablecoin “as a credible digital medium of exchange and as a bridge between the fiat and digital asset ecosystems”, said the bank’s financial supervision deputy managing director, Ho Hern Shin.
The central bank was clear in saying that the ability to apply to MAS will only be given to stablecoin issuers who fulfil all requirements under the framework. Only then will their stablecoins be recognised and labelled as “MAS-regulated stablecoins”.
This label will help users to navigate through a pool of tokens that also includes “stablecoins” which are not subject to MAS’ stablecoin regulatory framework. If a person misrepresents a token as an “MAS-regulated stablecoin”, they may be subject to penalties under MAS’ stablecoin regulatory framework, and placed on MAS’ Investor Alert List.
The bank also warned that it would not be responsible for anything if a person chooses to deal in stablecoins that are not regulated under MAS’ framework. In such cases, they should “make their own informed decisions on the accompanying risks”.
The revised regulatory framework moulds itself around the consultation paper that was published by MAS back in October 2022. This proposed regulatory approach for stablecoin-related activities talked about its vision to “develop an innovative and responsible digital asset ecosystem in Singapore”.
In the same, the MAS had revealed that it saw potential in stablecoins performing the role of a credible digital medium of exchange, provided they are well-regulated and are backed by arrangements that give a high degree of assurance of value stability.
Singapore has always been open to the use of stablecoins as a key technology that would place itself higher in spearheading a digital economy. While it continues to tighten regulations for the crypto industry, it also tries to spur innovation in the field, rising as the Asian financial hub. The new framework will be enforced once MAS holds more consultations, followed by the passing of amendments by the parliament.
