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If properly regulated, stablecoins have the potential to completely transform payments, according to the Monetary Authority of Singapore (MAS). MAS Managing Director Chia Der Jiun stressed the significance of making sure stablecoins hold their fixed value in an interview with The Business Times.
“Stablecoins have features that provide more value stability, with the potential to become a widely used payment instrument. MAS sees good potential in stablecoins provided they are well-regulated to have a high degree of value stability,” Chia stated.
To ensure this, MAS has finalized a regulatory approach targeting single-currency stablecoins, focusing on minimizing value stability risks.
MAS is committed to safeguarding users through a robust regulatory framework for stablecoins. The institution plans to amend the Payment Services (PS) Act to implement this framework.
Under the framework, only issuers meeting stringent requirements can apply to have their assets designated as “MAS-regulated stablecoins.” This status aims to differentiate well-regulated stablecoins from less stable counterparts, fostering greater trust among consumers.
MAS emphasized that these measures would enhance the stability and reliability of stablecoins in Singapore’s financial ecosystem.
While MAS is proactive in regulating stablecoins, it sees limited need for a central bank digital currency (CBDC) in the current landscape. Singapore’s cashless payment systems are already highly efficient, reducing the urgency for a retail Singapore dollar CBDC.
“MAS has assessed that the case for issuing a retail Singapore dollar CBDC in Singapore is not compelling at this juncture, as electronic payments in Singapore are quite pervasive, seamless and efficient,” the regulator noted.
By focusing on stablecoins rather than a CBDC, MAS underscores its intent to enhance payment systems without disrupting an already robust infrastructure.