The Monetary Authority of Singapore (MAS) developed a new regulatory framework for stablecoins linked to the Singapore dollar or other G10 currencies. The new rules for issuers of such coins are primarily designed to ensure their stability.
Singapore’s financial market regulator announced the finalization of a regulatory framework for stablecoins in the region. The new regulatory framework was developed following a public consultation in October last year.
The developed regulatory framework will apply to stablecoins issued in Singapore that are pegged to the Singapore dollar or any other currency of G10 member countries. Issuers of such coins will have to meet key requirements:
- Value stability. Reserve assets will be regularly reviewed for compliance with requirements relating to their composition, valuation, custody, and audit.
- Capital. Stablecoin issuers must maintain minimum core capital and liquid assets to mitigate the risk of insolvency and ensure an orderly termination if necessary.
- Redemption at par. Stablecoin issuers undertake to return the par value of assets to holders within five business days from a redemption request.
- Information disclosure. Issuers are required to provide relevant information to users, including information on their asset value stabilizing mechanism, rights of holders, and the results of reserve asset audits.
Issuers of stablecoins that meet all the requirements set out above will be able to obtain a special mark from the local financial regulator — MAS-regulated stablecoins. This mark will allow users to easily distinguish quality stablecoins from dubious digital payment tokens.
According to Ho Hern Shin, Deputy Managing Director of MAS, the new regulatory requirements will facilitate the use of stablecoins as a means of payment, as well as ensure their reliability and allow them to become a bridge between the ecosystems of fiat and digital assets.
A few months ago, MAS representatives proposed to develop a concept of standards for the use of digital assets, which would cover CBDCs, tokenized deposits, and stablecoins. The initiative was supported by a number of large companies, including DBS Bank, Amazon, FAZZ, and others.
