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Singapore central bank releases regulatory framework for stablecoins

Singapore’s central bank has released a revised regulatory framework aimed toward ensuring stability for single-currency stablecoins (SCS) regulated within the city-state.

The Monetary Authority of Singapore announced the framework on Aug. 15 which is aimed toward non-bank issued stablecoins pegged to the worth of the Singapore dollar or G10 currencies akin to the euro, British pound and United States dollar whose circulation exceeds $3.7 million (5 million Singapore dollars).

The bank’s financial supervision deputy managing director Ho Hern Shin said the framework goals to facilitate stablecoin use “as a reputable digital medium of exchange and as a bridge between the fiat and digital asset ecosystems.”

Excerpt from statement regarding its stablecoin regulatory framework. Source: MAS

Shin encouraged stablecoin issuers to arrange for compliance in the event that they wanted their stablecoin to be labeled as MAS-regulated.

The framework outlines several requirements for stablecoin issuers including redemption timelines, disclosures, reserve management and capital requirements, per MAS:

  • Value stability: Reserve assets will likely be subject to requirements regarding their composition, valuation, custody and audit, to offer a high degree of assurance of value stability.
  • Capital: Stablecoin issuers must maintain minimum base capital and liquid assets to cut back the danger of insolvency and enable an orderly wind-down of business if crucial.
  • Redemption at Par: Issuers must return the par value of the stablecoins to holders inside five business days from a redemption request.
  • Disclosure: Issuers must provide appropriate disclosures to users, including information on the SCS’ value stabilizing mechanism, rights of SCS holders, in addition to the audit results of reserve assets.

MAS noted only stablecoin issuers that fulfill the brand new framework’s requirements can apply to develop into MAS-regulated — a label the central banks says ensures they might be distinguished from non-regulated stablecoins by users.

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It warned those that represent a token as being MAS-certified can be subject to penalties set out in the brand new framework which include fines and imprisonme together with being added to an alert list. 

The revised regulatory framework accounts for feedback from an October 2022 public consultation. MAS might want to hold consultations and parliament must pass amendments that may implement the framework.

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