Global: Singapore Introduces Regulatory Framework for Single-Currency Stablecoins

Singapore’s central bank has unveiled a regulatory framework aimed at enhancing the stability of single-currency stablecoins.

The framework will be applicable to non-bank issuers of single-currency stablecoins linked to the Singapore Dollar or G10 currencies, provided their circulation exceeds S$5 million, as outlined by the Monetary Authority of Singapore (MAS).

Such stablecoins will carry the label of “MAS-regulated stablecoin”. The central bank needs to undergo legislative consultations before Parliament can pass the required amendments to activate the framework.

Single-currency stablecoins are a form of cryptocurrency tied to conventional assets such as national currencies. Presently, only one stablecoin has been issued in Singapore.

The MAS remarked, “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.”

Citing instances of “high profile failures,” including the collapse of TerraUSD (UST) and Luna tokens, the MAS emphasized the considerable risks involved in cryptocurrency investments.

The United States is also moving towards regulating such coins. The U.S. House Financial Services committee recently advanced a bill to establish a federal regulatory framework.

MAS-regulated stablecoin issuers will be obligated to meet stipulations regarding value stability, capital, prompt redemption, and transparency in audit outcomes.

These regulations entail maintaining a portfolio of reserve assets with minimal risk. The value of these reserve assets must be equivalent to at least 100% of the outstanding single-currency stablecoins in circulation.

In addition, issuers must hold a minimum base capital greater than S$1 million or half of their annual operating expenses.