Singapore's MAS Finalizes Framework for Stablecoin Regulation

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Published: August 15, 2023 7:55 am

Last Updated: August 15, 2023 11:59 am

The Monetary Authority of Singapore (MAS) issued a new framework to regulate stablecoins, asking issuers to meet different rules on value stability, minimum capital, and more. The move comes after months of collecting feedback on the new framework and proposed to tighten crypto regulations in October 2022.

Issuers Must Back Stablecoin At 100% of Market Value At Least

The Central Bank of Singapore released a new regulatory framework for stablecoins on Tuesday after collecting feedback from the public for several months.

According to Asia Nikkei, the new guidelines will apply to nonbank issuers of single-currency stablecoins tied to the Singapore dollar (SGD) or any other G10 fiat currency if circulation exceeds 5 million SGD ($3.68 million). The MAS plans to hold a public consultation on legislative amendments in 2024.

“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.”

– the authority said in a statement.

Stablecoin issuers must adhere to key rules for value stability, capital, and disclosure, among others, to win certification for their digital assets from the MAS. One of the requirements asks issuers to hold reserve assets of at least 100% stablecoin’s value in circulation at all times in liquid assets such as cash and cash equivalents.

In addition, the issuers also must make sure that stablecoin users can redeem the value of fiat-pegged assets at par within five business days. The new framework sets a minimum base capital of 1 million SGD or half the issuer’s yearly operating expenses.

Singapore’s Change in Stance Toward Crypto

The new regulatory framework underscores the MAS’s commitment to bringing greater clarity and scrutiny to the burgeoning crypto industry while stimulating innovation in the city-state.

Singapore’s central bank and financial regulator signaled changes in stablecoin regulations a year ago after the collapse of the Terra ecosystem sent shockwaves through the sector. The crash caused a knock-on effect, pushing local crypto firms such as Three Arrows Capital and Voyager Digital into bankruptcy.

As a result, the MAS proposed new, stricter regulations for crypto investors in October 2022, including a ban on debt-financed and leveraged trading. The authority also banned advertisements for crypto services in public spaces amid a sharp surge in crypto investors in the Asian hub.

This article originally appeared on The Tokenist

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