As Singapore continues to warm up to the adoption of stablecoins in its economy, the Monetary Authority of Singapore (MAS) has released a new regulation to provide more regulatory clarity for the industry.
Stablecoin Regulatory Framework
Singapore’s Central Bank has released a finalized regulatory framework that will regulate stablecoin issuers in the country. This latest regulation stipulates key requirements for entities regulated in the country to perform stablecoin-related services such as issuance and custody.
In October 2022, the regulator released a consultation paper on its proposed framework to regulate stablecoin issuers and intermediaries in the country. As part of efforts to develop an all-encompassing framework, it invited comments from the relevant stakeholders and other interested parties on the proposed regulation.
Taking the feedback received into account, this recently released framework will ensure a “high degree of value stability for stablecoins regulated in Singapore,” according to the agency.
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Highlights From The Regulation
This framework will reportedly only apply to single-currency stablecoins (SCS) pegged to the Singapore Dollar or any G10 currencies, which includes the United States Dollar. Furthermore, it will only govern non-bank issuers with SCS in circulation exceeding $3.7 million (5 million Singapore dollars) in value. They must also obtain a Major Payment Institution (MPI) license and comply with other requirements.
As part of these requirements, these issuers are meant to hold their reserve assets in the currency of the stablecoin peg, which will be held in “segregated accounts on trust.” Permitted custodians of the reserve assets include financial institutions licensed for such services in the country, and overseas-based custodians who boast at least a rating of “AA-.” These overseas-based custodians must however have a regulated branch in Singapore.
To promote transparency, these stablecoin issuers must provide carry out a monthly independent audit of their reserves, with the report submitted to MAS and posted on the company’s website.
Issuers must also reply promptly to redemption requests as they are required to return the fiat value of the single-currency stablecoin within five business days of the holder’s request.
“MAS sees potential in stablecoins performing the role of a credible digital medium of exchange, provided they are well-regulated and are backed by arrangements that give a high degree of assurance of value stability,” the regulator said
This echoes the sentiments of US Representative Patrick McHenry who mentioned that stablecoins could be the “pillar of our 21st century payment system” if issued under clear regulations.
The US House Financial Services Committee is currently pushing for the adoption of the Stablecoin Bill which guide how stablecoins are registered and issued.