Singapore's Monetary Authority Sets Stablecoin Standards For Trustworthy Digital Payment Tokens

The Monetary Authority of Singapore (MAS) Tuesday announced its regulatory framework for stablecoins, aiming to ensure their value stability.

This move comes after MAS took into account the feedback from a public consultation held in October 2022.

The new framework will be applicable to single-currency stablecoins (SCS) that are pegged to the Singapore Dollar or any G10 currency and are issued within Singapore.

Under this framework, issuers of such SCS will need to adhere to several key requirements:

Value Stability: The reserve assets of SCS will be governed by rules concerning their composition, valuation, custody, and audit. This is to ensure a high level of value stability.
Capital Maintenance: Issuers are mandated to maintain a minimum base capital and liquid assets. This is to mitigate the risk of insolvency and to facilitate an orderly wind-down if required.
Redemption At Par: Upon receiving a redemption request, issuers are required to return the par value of SCS to its holders within a span of five business days.
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Transparent Disclosure: Issuers are obligated to offer clear disclosures to users. This includes details about the value stabilizing mechanism of the SCS, the rights of SCS holders, and audit outcomes of reserve assets.

Furthermore, only those stablecoin issuers that meet all the stipulated requirements can apply to MAS for their stablecoins to be officially recognized as "MAS-regulated stablecoins".

This distinction will help users differentiate between MAS-regulated stablecoins and other digital payment tokens. Any misrepresentation of a token as a "MAS-regulated stablecoin" will lead to penalties under the MAS framework, and the responsible entity may be added to MAS' Investor Alert List.

Ho Hern Shin, Deputy Managing Director (Financial Supervision) at MAS, commented on the development, stating, “The stablecoin regulatory framework by MAS is designed to promote the use of stablecoins as a trustworthy digital medium of exchange, bridging the gap between traditional fiat and the digital asset ecosystems. We urge SCS issuers aspiring for their stablecoins to be recognized as 'MAS-regulated stablecoins' to start early preparations for compliance.”

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