On August 15th, the Monetary Authority of Singapore (MAS) announced the finalization of its regulatory framework for stablecoins on its official website. This decision was made after considering feedback from a public consultation in October 2022.
MAS emphasized that, with proper regulation to ensure value stability, stablecoins can serve as a trustworthy medium for innovation, especially for "on-chain" transactions, including the purchase and sale of digital assets.
MAS's stablecoin framework applies to single currency stablecoins (SCS) pegged to the Singapore dollar or any G10 currency. Issuers of these specific SCS must adhere to key requirements:
Value Stability: Requirements related to the composition, valuation, custody, and auditing of the SCS reserves will ensure their value remains stable.
Capital: Issuers must maintain a minimum baseline of capital and liquid assets, reducing the risk of insolvency and allowing an orderly business termination when needed.
Redemption at Par Value: Issuers must refund the face value of SCS to holders within five working days upon redemption request.
Disclosure: Issuers must provide users with appropriate disclosure, including information about the SCS's value stabilization mechanism, holders' rights, and audit results of reserve assets.
Only issuers who comply with all framework requirements can apply to have their stablecoin recognized and labeled as "MAS-regulated Stablecoin". This designation will enable users to easily differentiate between MAS-regulated stablecoins and other digital payment tokens.
Misrepresentation of tokens as "MAS-regulated Stablecoin" may result in penalties under MAS's stablecoin framework and inclusion in MAS's investor alert list. Users trading stablecoins not governed by the MAS framework should be prudent regarding the associated risks.
Ms. Ho Hern Shin, Deputy Managing Director (Financial Supervision) of MAS, stated that the stablecoin framework aims to promote the use of stablecoins as reliable digital mediums, bridging the gap between legal currencies and digital asset ecosystems. She encourages SCS issuers seeking the "MAS-regulated Stablecoin" status to prepare for compliance.
Typically, stablecoins circulate on blockchains without geographical boundaries. They are therefore exceptionally convenient for any cross-border payment applications. Singapore's new regulation permitting the issuance of stablecoins based on the Singapore dollar and any G10 currency will inevitably attract substantial capital from across the globe.
For more details on the finalized stablecoin regulatory framework and responses to the public consultation, please visit the MAS website.