MAS firms up regulatory framework for stablecoins
The Monetary Authority of Singapore (MAS) has laid out its new regulatory framework for stablecoins, following a public consultation in October last year.
MAS finalises regulatory framework for stablecoins
The new framework takes into account the feedback received from the public consultation, and will apply to single-currency stablecoins (SCS) pegged to the Singapore dollar or any of the G10 currencies that are issued in Singapore.
“Stablecoins are digital payment tokens designed to maintain a constant value against one or more specified fiat currencies,” explains MAS. “When well-regulated to preserve such value stability, stablecoins can serve as a trusted medium of exchange to support innovation, including the ‘on-chain’ purchase and sale of digital assets.”
Issuers of SCS in Singapore will have to fulfil “key requirements” in order to be recognised and labelled as “MAS-regulated stablecoins”.
These include: having SCS reserve assets that give a “high degree of assurance” of value stability; maintenance of minimum base capital and liquid assets by issuers to reduce risk of insolvency and enable an “orderly wind-down if necessary”; redemption of SCS at par value to holders within five business days; and providing appropriate information and disclosures to users.
Anyone who misrepresents a token as a “MAS-regulated stablecoin” may be subject to penalties, including financial penalties or imprisonment, MAS warns, alongside being placed on MAS’ Investor Alert List.
“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,” comments Ho Hern Shin, deputy managing director (financial supervision), MAS.
“We encourage SCS issuers who would like their stablecoins recognised as ‘MAS regulated stablecoins’ to make early preparations for compliance.”
The emerging potential of stablecoins
The news follows days after PayPal launched its US dollar stablecoin, PayPal USD, after it had reportedly halted work on the offering in February following increased regulatory scrutiny.
Elsewhere around the world, the Republic of Palau, an island nation in the Pacific, joined forces with Ripple to launch a limited stablecoin pilot on 31 July.
The Financial Stability Board (FSB), an international body monitoring the global financial sector, also published its regulatory framework for cryptoasset activities in July.
