MAS reveals main features of its stablecoin regulatory framework

Wednesday 16 August 2023 11:26 CET | News

The Monetary Authority of Singapore has revealed the main features a regulatory framework that aims to ensure value stability for stablecoins.


According to the MAS, the framework's development was influenced by feedback collected subsequent to a public consultation held in October 2022. 

The MAS believes that stablecoins, defined as digital payment tokens engineered to maintain a consistent value relative to one or more specific fiat currencies, have the potential, when properly regulated to maintain value stability, to function as reliable mediums of exchange. Such stability can support innovations such as the on-chain trading of digital assets. 

MAS's regulatory approach applies to single-currency stablecoins (SCS) that are pegged to either the Singapore dollar or any G10 currency issued within Singapore. The regulatory requirements that SCS issuers are expected to meet encompass several key areas such as: 

  • Value Stability: the composition, valuation, custody, and audit of SCS reserve assets must adhere to specific criteria, providing a high level of assurance regarding value stability.
  • Capital: issuers are mandated to maintain minimum base capital and liquid assets. This requirement aims to mitigate insolvency risks and facilitate an organised business wind-down if needed.
  • Redemption at Par: within a span of five business days following a redemption request, issuers are obligated to return the par value of SCS to holders.
  • Disclosure: issuers must furnish appropriate disclosures to users, including details about the value-stabilising mechanism of the SCS, the rights of SCS holders, and the audit outcomes of reserve assets.
Under this framework, only stablecoin issuers that fully comply with the stipulated requirements are eligible to seek recognition from MAS, designating their stablecoins as 'MAS-regulated stablecoins.'

The Monetary Authority of Singapore has revealed the main features a regulatory framework that aims to ensure value stability for stablecoins.


MAS-regulated stablecoins

This label will help users easily differentiate MAS-regulated stablecoins from other digital payment tokens, including stablecoins that aren't subject to the MAS stablecoin regulatory framework. It's worth noting that falsely labeling a token as an 'MAS-regulated stablecoin' could result in penalties outlined within MAS's stablecoin regulatory framework, along with inclusion in MAS's Investor Alert List. 

Individuals opting to engage with stablecoins not regulated under MAS's framework are advised to make informed choices considering the associated risks. 

Officials from MAS highlighted that this stablecoin regulatory framework seeks to facilitate the adoption of stablecoins as a trustworthy digital medium of exchange and as a bridge between fiat and digital asset ecosystems. In this context, SCS issuers aspiring to have their stablecoins recognised as 'MAS regulated stablecoins' are advised to proactively prepare for compliance.

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Keywords: cryptocurrency, stablecoin, regulation, digital currency
Categories: DeFi & Crypto & Web3
Companies: Monetary Authority of Singapore
Countries: Singapore
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DeFi & Crypto & Web3

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