Singapore central bank releases regulatory framework for stablecoins

Singapore’s central bank has released a revised regulatory framework aimed at ensuring stability for single-currency stablecoins regulated in the city-state.

The Monetary Authority of Singapore announced the framework on Aug. 15 and said it will police single-currency stablecoins (SCS) pegged to the value of the Singapore dollar or G10 currencies such as the euro, British pound and United States dollar.

“MAS’ stablecoin regulatory framework aims to facilitate the use of stablecoins as a credible digital medium of exchange, and as a bridge between the fiat and digital asset ecosystems,” said the bank’s deputy managing director of financial supervision Ho Hern Shin.

“We encourage SCS issuers who would like their stablecoins recognized as ‘MAS regulated stablecoins’ to make early preparations for compliance,” Shin added.

The framework outlines several requirements that stablecoin issuers would have to adhere to, including timely redemptions and robust reserve management, among others: 

• Value stability: Reserve assets will be subject to requirements relating to their composition, valuation, custody and audit, to give a high degree of assurance of value stability.
• Capital: Stablecoin issuers must maintain minimum base capital and liquid assets to reduce the risk of insolvency and enable an orderly wind-down of business if necessary.
• Redemption at Par: Issuers must return the par value of the stablecoins to holders within 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, as well as the audit results of reserve assets.

MAS noted only stablecoin issuers that fulfill the requirements under the framework will be able to apply to become MAS-regulated.

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

It also warns any person that represents a token as being MAS-ceritified would be subject to penalties set out in the new framework, along with being added to an alert list. 

The revised regulatory framework accounts for feedback from an October 2022 public consultation.

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This is a developing story, and further information will be added as it becomes available.