Singapore’s central bank, the Monetary Authority of Singapore (MAS), has unveiled a revised regulatory framework to ensure stability for single-currency stablecoins (SCS) in the city-state. The framework, announced on August 15th, focuses on non-bank issued stablecoins that are pegged to the Singapore dollar or G10 currencies like the euro, British pound, and United States dollar.
The new framework aims to establish stablecoins as a credible digital medium of exchange and bridge the gap between fiat and digital asset ecosystems. It sets out specific requirements for stablecoin issuers to ensure value stability, capital adequacy, redemption timelines, and appropriate disclosures.
Under the framework, reserve assets backing stablecoins will be subject to stringent requirements related to composition, valuation, custody, and audit. These measures aim to provide a high degree of assurance regarding the stability of the value of stablecoins.
Stablecoin issuers must maintain a minimum base capital and sufficient liquid assets to minimize the risk of insolvency. This requirement ensures that issuers can wind down their business in an orderly manner if necessary, reducing potential disruptions to the stability of the overall financial system.
To maintain trust and confidence in stablecoins, issuers must honor redemption requests promptly. The framework mandates that issuers return the par value of stablecoins to holders within five business days of a redemption request. This provision aims to protect the interests of users and maintain the stability of the stablecoin ecosystem.
Issuers are required to provide comprehensive disclosures to users, including information on the value stabilizing mechanism of the stablecoin, the rights of stablecoin holders, and the audit results of reserve assets. This transparency enhances user understanding and trust in stablecoins.
MAS emphasizes that only stablecoin issuers fulfilling the requirements outlined in the new framework will be eligible to apply for MAS regulation. This label distinguishes regulated stablecoins from non-regulated counterparts, providing users with confidence in the stability and reliability of MAS-regulated stablecoins.
The framework includes penalties for misrepresenting tokens as MAS-certified. Those found guilty face fines, imprisonment, and placement on an alert list. MAS maintains its commitment to ensuring the integrity of the stablecoin market and protecting users from fraudulent activities.
The revised regulatory framework incorporates feedback received during a public consultation in October 2022. MAS will conduct further consultations, and amendments must be passed in parliament to enforce the framework fully. These steps ensure a collaborative and comprehensive approach to regulating stablecoins in Singapore.
Singapore’s central bank’s introduction of a new regulatory framework for stablecoins demonstrates its commitment to fostering stability and confidence in the digital asset space. By setting clear requirements for issuers and emphasizing transparency and value stability, MAS strengthens the foundation for a vibrant and regulated stablecoin ecosystem in Singapore.