Singapore’s Monetary Authority Sets Stablecoin Rules

Singapore’s Monetary Authority (MAS) has introduced an updated set of guidelines to enhance the stability and trustworthiness of single-currency stablecoins (SCS). This move caters to stablecoins not issued by banks and tied to the value of currencies like the Singapore dollar, euro, British pound, and the US dollar, provided their circulation exceeds 5 million Singapore dollars (about $3.7 million).

MAS’s decision to refine this framework came after analyzing the feedback from a public consultation held in October 2022. Before this revised framework can take full effect, additional consultations are needed, and the parliament must approve the necessary amendments.

Ho Hern Shin, MAS’s Deputy Managing Director of Financial Supervision, articulated that this new set of rules aims “to facilitate stablecoin use as a credible digital medium of exchange and as a bridge between the fiat and digital asset ecosystems.” Shin further emphasized the need for stablecoin issuers to align with these regulations if they wish to earn the MAS-regulated label.

Breaking down the framework, several key requirements emerge for stablecoin issuers:

1. Value Stability: Issuers must ensure the composition, valuation, custody, and audit of reserve assets align with specific standards to assure value stability.
2. Capital Maintenance: Issuers are obligated to uphold minimum base capital and liquid assets to minimize insolvency risks and to facilitate a systematic business shutdown if required.
3. Prompt Redemption: When users make a redemption request, issuers are bound to return the stablecoins’ par value within five business days.
4. Transparent Disclosures: Issuers are tasked with informing users about the stablecoin’s value stabilization method, holders’ rights, and audit outcomes for reserve assets.

Only those who adhere to these guidelines can earn the privilege to be termed as MAS-regulated. This designation aids users in distinguishing between regulated and non-regulated stablecoins.