Singapore seeks public input on stablecoin regulatory framework

Singapore’s Monetary Authority is seeking feedback on legislation that would formally establish its stablecoin regime, including rules governing who can issue MAS-regulated stablecoins and the safeguards required to maintain their value and protect holders.

The MAS released proposed amendments to the Payment Services Act on Tuesday that would create the legal basis for regulating stablecoins issued in the city-state. The central bank unveiled its initial approach in 2022 and finalized its stablecoin framework in 2023, but legislation to formally implement the regime has not yet been passed.

The proposed amendments would impose several requirements on licensed stablecoin issuers. Under the regime, only issuers that obtain a license would be allowed to represent their tokens as “MAS-regulated stablecoins” or identify themselves as licensed MAS-regulated stablecoin issuers.

The framework would also draw a regulatory line between approved stablecoins and other cryptocurrencies marketed as stablecoins. Tokens that are not regulated under the MAS-SCS framework would be classified as Digital Payment Tokens and subject to the same consumer protection safeguards that apply to other DPTs.

The MAS is seeking views on key requirements related to the stability and operation of regulated stablecoins, including capital requirements, redemption at par and disclosure obligations. The central bank is also proposing new provisions in response to international developments in stablecoin regulation.

The proposals would allow Singaporean and foreign issuers to jointly issue stablecoins under the MAS framework if the risks associated with the arrangement are adequately mitigated. MAS would also establish a recognition regime for a limited number of foreign-issued stablecoins operating under comparable regulatory frameworks, aimed in part at facilitating cross-border wholesale use.

Financial stability requirements would be strengthened through a ban on interest payments for MAS-regulated stablecoins, mandatory stress testing and requirements for issuers to maintain recovery and orderly wind-down plans. The proposed rules would also require issuers to safeguard customer funds received before the related stablecoins are issued, adding another layer of consumer protection.

Ho Hern Shin, MAS’ deputy managing director for financial supervision, said the proposed legislation would provide clear guardrails for responsible stablecoin innovation. As tokenization expands, she said trusted stablecoins could serve as credible settlement assets in tokenized financial markets while reducing risks for users and the wider financial system.