MAS Unveils New Regulatory Framework to Bolster Stability of Singapore’s Stablecoins
The Monetary Authority of Singapore (MAS) has unveiled a robust regulatory framework aimed at ensuring a robust level of value stability for stablecoins operating within the nation’s jurisdiction. This announcement follows an extensive public consultation conducted in October 2022, during which feedback was garnered from industry stakeholders.
Stablecoins, as digital payment tokens designed to maintain a consistent value against specified fiat currencies, are a cornerstone of the cryptocurrency landscape. When effectively regulated to uphold this value stability, stablecoins can function as reliable mediums of exchange, fostering innovation and enabling seamless “on-chain” transactions involving digital assets.
The newly introduced MAS regulatory framework specifically applies to single-currency stablecoins (SCS) pegged to the Singapore Dollar or any G10 currency, issued within Singapore. Issuers of such stablecoins are required to adhere to several pivotal prerequisites:
- Value Stability: The reserve assets backing SCS must adhere to stringent requirements encompassing their composition, valuation, custody, and audit. This ensures a high level of confidence in value stability.
- Capital: Issuers must maintain a minimum capital base and liquid assets to mitigate insolvency risks and facilitate an orderly business wind-down if necessary.
- Redemption at Par: The framework mandates that issuers return the par value of SCS to holders within five business days of a redemption request.
- Disclosure: Issuers are obligated to provide comprehensive disclosures to users, including insights into the SCS’ value stabilizing mechanism, rights of SCS holders, and audit results of reserve assets.
Issuers that successfully fulfill all the requirements outlined within the framework can seek recognition from MAS, resulting in their stablecoins being labeled as “MAS-regulated stablecoins.” This label holds significance as it enables users to easily distinguish between MAS-regulated stablecoins and other digital payment tokens that are not governed by the same regulatory standards.
By facilitating the development of a stablecoin ecosystem aligned with regulatory standards, MAS aims to establish stablecoins as credible digital mediums of exchange and bridges between traditional fiat currencies and the burgeoning digital asset space. Industry participants aspiring to have their stablecoins recognized under this regulatory framework are encouraged to proactively prepare for compliance.
To delve further into the intricacies of this regulatory development, the detailed press release by MAS provides comprehensive insights into the newly introduced framework and its implications for stablecoin issuers.