Singapore Central Bank Releases Stablecoin Regulatory Framework

Singapore Central Bank Regulates Stablecoins

Author: JESSE COGHLAN, COINTELEGRAPH; Translation: Song Xue, LianGuai

The Monetary Authority of Singapore (MAS) has released a revised regulatory framework aimed at ensuring the stability of Singapore’s Single-Currency Stablecoins (SCS).

The framework, announced by the MAS on August 15, targets non-bank issued stablecoins that are pegged to the Singapore dollar or G10 currencies such as the euro, pound sterling, and US dollar, and have a circulation exceeding $3.7 million USD ($5 million SGD).

Ho Hern Shin, Deputy Managing Director of the Banking and Financial Institutions Group at MAS, stated that the framework aims to facilitate the use of stablecoins as “trusted digital exchange mediums and bridges between legal tender and digital asset ecosystems.”

Excerpt from the statement regarding its stablecoin regulatory framework. Source: Monetary Authority of Singapore

Shin encourages stablecoin issuers to be prepared for compliance if they wish to have their stablecoins labeled as MAS-regulated.

The framework outlines several requirements that MAS has for stablecoin issuers, including redemption schedules, disclosure, reserve management, and capital requirements:

Value Stability: The composition, valuation, custody, and auditing of reserve assets must meet the requirements, ensuring a high level of value stability.

Capital: Stablecoin issuers must maintain minimum base capital and liquid assets to reduce the risk of bankruptcy and orderly wind down operations when necessary.

Redemption at Face Value: Issuers must return the face value of stablecoins to holders within five working days after a redemption request.

Disclosure: Issuers must provide appropriate disclosures to users, including information about the SCS value stability mechanism, SCS holder rights, and the results of reserve asset audits.

MAS notes that only stablecoin issuers who meet the requirements of the new framework can apply for MAS regulation – the central bank states that this label ensures that users can distinguish them from unregulated stablecoins.

It warns that tokens certified by MAS will be subject to penalties outlined in the new framework, including fines and imprisonment, and will be added to an alert list.

The revised regulatory framework takes into account feedback from a public consultation in October 2022. Consultations are required by the MAS, and amendments must be passed by Parliament to implement the framework.