Singapore’s Monetary Authority of Singapore (MAS) has outlined new stablecoin rules including reserves, redemptions, and user security, developing a regulatory standard for compliant stablecoins in digital finance industry.
Also, MAS is outlining amendments to the Payment Services Act 2019 to integrate its MAS Single Currency Stablecoins framework. It covers the licensing issuer, 100% reserve backing, prompt redemption, and no interest or earning payments.
MAS Framework
Singapore’s MAS outlined shifts to the Payment Services Act 2019 to adopt its Single Currency Stablecoin (MAS-SCS) framework on September 1.
Under the outlined framework, only stablecoins issued by MAS-licensed issuers will be enabled to use the indication “MAS-regulated stablecoins.”
The tokens must be pegged to the Singapore dollar or a G10 currency including the US dollar or euro.
Issuers must also be required to hold 100% reserve towards stablecoins in circulation, supported by safe and liquid assets.
Meanwhile users must be able to redeem their stablecoins the same as fiat value within five (5) business days.
However, stablecoins that fail to meet these requirements will not be authorized to leverage the MAS-regulated label. Instead, they will be handled as Digital Payment Tokens, such as other cryptocurrencies.
Restrictions on Token Holders
The only key restrictions that MAS regulated stablecoin issuers will not be enabled to offer interest or benefits on token holders.
The main objective is to maintain stablecoins on payments and transaction instruments than savings or investment products.
MAS noted that the network aims to develop clear regulatory guardrails for stablecoins while maintaining high standards of stability, reserve, and governance.
Cross-Border Payments and Tokenized Financial Markets
Under the new outline, MAS may enable Singapore foreign joint stablecoin issuances to pass as MAS regulated.
MAS also initiates to recognize a restricted number of foreign issued stablecoins for cross-border transactions to manage under comparable regulatory standards.
This could broaden the role of regulated stablecoins in cross border payments and tokenized financial markets.
MAS Shifts to Reinforce Stablecoin Regulation
Singapore’s MAS outlined rules shows a wider push for tighter stablecoin regulation across Asia such as Japan, Hong Kong, and South Korea.
The outlined rules could influence how issuers and exchanges operate across the region, such as reserve requirements and the restriction on interest payments.
MAS will conclude its public consultation on the outlined stablecoin rules and evaluate the feedback received from the participants prior to shifting the outlined to the Payment Services Act.
