Singapore Unveils Comprehensive Regulatory Framework for Stablecoins

MAS said that only stablecoin issuers meeting the requirements of the newly introduced guidelines would only be considered for regulation. 

Singapore, a global financial hub known for its innovative approach to technology and finance, has taken a decisive step in shaping the future of stablecoins within its jurisdiction. The Monetary Authority of Singapore (MAS) has introduced a detailed regulatory framework designed to ensure stability and security in issuing and operating single-currency stablecoins (SCS) around the city-state.

According to the announcement on August 15, the newly introduced regulatory framework comes after extensive consultations and assessments, reflecting the country’s commitment to responsible innovation in the ever-evolving world of cryptocurrencies.

Under these guidelines, stablecoins pegged 1:1 to the value of the Singapore dollar or any other G10 currency, such as the United States dollar, the European euro, and the British pound, when issued within Singapore, fall under the regulatory purview of MAS. However, MAS explained that the regulation is subject to currencies with a total circulation of over 5 million Singapore dollars ($3.7 million).

Monetary Authority of Singapore Outlines Three-Day Transfer Window for SCS Stablecoins

According to MAS, non-bank issuers of stablecoins exceeding S$5 million in circulation will be subject to these regulations, with such stablecoins designated as MAS-regulated stablecoins. While the framework will require legislative amendments for full enforcement, its introduction showcases the authority’s proactive approach to fostering responsible financial innovation.

The central bank authorities emphasized the importance of maintaining value stability for stablecoins. Reserves backing SCS are subject to stringent requirements pertaining to composition, valuation, custody, and audit. This ensures a high level of assurance regarding the stability of these tokens. Furthermore, the financial authorities have outlined three business days as the transfer window for moving SCS tokens, despite suggestions for a more robust time frame.

The authorities said that companies creating stablecoins must maintain a minimum base of capital and liquid assets, reducing the risk of insolvency and enabling a controlled business wind-down if necessary.

MAS also said in the announcement that only stablecoin issuers meeting the requirements of the newly introduced guidelines would only be considered for regulation.

“Only stablecoin issuers that fulfill all requirements under the framework can apply to MAS for their stablecoins to be recognized and labeled as ‘MAS-regulated stablecoin’ This label will enable users to readily distinguish MAS-regulated stablecoins from other digital payment tokens, including ‘stablecoins’ which are not subject to MAS’ stablecoin regulatory framework,” MAS said in the announcement.

Stablecoin Issuers Are Mandated to Full Disclosure

Another aspect of the stablecoin guidelines includes full transparency. MAS said the newly introduced framework also requires issuers to promptly return the par value of stablecoins to holders within five business days of a redemption request.

Additionally, the financial regulator said that stablecoin creators in Singapore are mandated to provide users with comprehensive disclosures, including information about the value stabilizing mechanism, rights of stablecoin holders, and the results of reserve asset audits.

Ms. Ho Hern Shin, the deputy director at MAS, believes that stablecoins are a credible digital medium of exchange and potentially serve as a bridge between the traditional finance ecosystem and the emerging economy. The MAS director also encouraged issuers to start making early preparations for compliance.

“We encourage SCS issuers who would like their stablecoins recognized as ‘MAS regulated stablecoins’ to make early preparations for compliance,” Shin said.

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Chimamanda U. Martha

Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.

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