A new regulatory framework stablecoins has just been set by the Monetary Authority of Singapore (MAS). It will apply to single-currency stablecoins (SCS) that are pegged to the Singapore Dollar or any G10 currency, and are issued in Singapore.

The framework seeks to ensure a high degree of value stability for stablecoins that are regulated in the country, and follows public feedback from a consultation in October 2022.

“MAS’s 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,” said Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS. She added: “We encourage SCS issuers who would like their stablecoins recognised as MAS-regulated stablecoins to make early preparations for compliance.”

Value stability and disclosures

With MAS’s framework, issuers of SCS will have to fulfil key requirements relating to value stability, capital, redemption at par, and disclosure.

• Value stability: SCS reserve assets will be subject to requirements relating to their composition, valuation, custody and audit, to give a high degree of assurance of value stability.
• Capital: Issuers must keep a minimum base capital and liquid assets to reduce the risk of insolvency, including performance of an orderly wind-down of business if needed.
• Redemption at par: Issuers must return the par value of SCS to holders within five business days from a redemption request.
• Disclosure: Issuers must provide appropriate disclosures to users, including information on the SCS’s value-stabilising mechanism, what rights SCS holders have, and the audit results of reserve assets.

To be able to label a stabelcoin as an MAS-regulated stablecoin, issuers must fulfil all requirements under the framework to be able to apply to MAS for their stablecoins to be successfully recognized and labelled.  

This label will help users distinguish MAS-regulated stablecoins from other digital payment tokens, and to separate regulated stablecoins from unregulated.

“Any person that misrepresents a token as an MAS-regulated stablecoin, may be subject to penalties under MAS’s stablecoin regulatory framework, and placed on MAS’s Investor Alert List,” the watchdog warns.