Monetary Authority of Singapore Releases Regulatory Framework for Single-Currency Stablecoins

Updated: 15 August 2023

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The Monetary Authority of Singapore (MAS) released the regulatory framework for single-currency stablecoins to ensure their value stability.

@MAS_sg has announced the features of a new regulatory framework that seeks to ensure a high degree of value stability for #stablecoins regulated in #Singapore. https://t.co/j12QambGIJ pic.twitter.com/LBUoOGY16P

— MAS (@MAS_sg) August 15, 2023

The announcement came on August 15th and was directed at non-bank issued stablecoins pegged to the Singaporean dollar or G10 currencies whose circulation is more than 5 million worth of Singaporean dollars, including the United States Dollar, the British Pound, and the Euro.

Single-Currency Stablecoin (SCS) Requirements

The MAS regulatory framework will apply to single-currency stablecoin issuers who issue stablecoins pegged to a single fiat currency. The announcement has highlighted four essential requirements that SCS issuers must fulfil:

Value Stability

Single-currency stablecoins reserve assets must fulfil the requirements related to their composition, custody, valuation and audit. The report states that SCS issuers must prove that the value of the coins they are issuing is stable.

According to the rules, the SCS stablecoins must be stored in low-risk liquid assets and inside segregated accounts with eligible custodians. Furthermore, the value stability framework also demands that the reserve assets must be valued at more than or equal to the value of SCS in circulation at all times.

Capital

The framework requires SCS issuers to maintain a minimum base capital of S$1 million and liquid assets to prevent insolvency risks and facilitate company wind down if the situation calls for it. The capital requirements also state that issuers would be prohibited from conducting non-issuance business.

Redemption at Par

The issuer must return the face value of the SCS within five days after an SCS holder posts a request for redemption. Furthermore, the redemptions conditions must be reasonable, and the issuer should disclose them to holders upfront.

Disclosure

SCS issuers must disclose critical information to users, including details about the implemented mechanism to stabilize the value of SCS, SCS holders’ rights, and audit results of the reserve assets.

Recognition as MAS-Regulated Stablecoin

Those who fulfil the above requirements can apply to MAS to get their single-currency stablecoins recognized as MAS-regulated stablecoins.

“This label will enable users to readily distinguish MAS-regulated stablecoins from other digital payment tokens, including stablecoins, which are not subject to the MAS-stablecoin’s regulatory framework”, the announcement reads.

Warning stablecoin issuers not to misrepresent their stablecoins as MAS-regulated, the Monetary Authority of Singapore has warned that those who do so will be subject to multiple penalties, including their names added to the MAS Investor’s Alert list.

According to Mr Ho Hern Shin, Deputy Managing Director of the Monetary Authority of Singapore, the announced regulatory framework for stablecoins is to enable stablecoins as a credible digital medium of exchange and act as a bridge between fiat and crypto.

The new regulatory framework has been formulated after considering the feedback from MAS on October 2022. But before the framework is enforced, MAS has to contemplate, and the parliament has to approve these changes.

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