The Monetary Authority of Singapore (MAS) unveiled a regulatory framework for stablecoins on Tuesday as the Southeast Asian city-state aims to become a global hub for the crypto industry.
See related article: Is PayPal’s new stablecoin a watershed moment for crypto?
Fast facts
- A MAS announcement on Tuesday said the proposed regulation will apply to Singapore-issued single-currency stablecoins (SCS). The SCS will be pegged to the Singapore Dollar or Group of 10 currencies, including the U.S. dollar, the euro and the U.K. pound.
- Under the framework, key requirements for stablecoin issuers include value stability, a minimum base capital level, guarantees of redemption at par value and guarantees of user disclosure related to issues including holder rights and auditing results.
- “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,” MAS wrote in the announcement.
- Stablecoins that meet all the requirements can be recognized and labelled as “MAS-regulated stablecoins” to distinguish them from other tokens that are not subject to the regulatory framework.
- The MAS stablecoin regulatory framework “aims to facilitate the use of stablecoins as a credible digital medium of exchange, and as a bridge between the fiat and digital asset ecosystems,” said MAS Deputy Managing Director Ho Hern Shin in the announcement.
- Singapore is not the only economy seeking to regulate stablecoins. Hong Kong, which launched its regulatory framework for crypto exchanges in June, is working on a licensing regime for stablecoin issuers that could be unveiled as early as this year. The U.S. Congress is also processing a stablecoin bill that was proposed in April 2023.
- “Together with Paypal’s recent announcement of its stablecoin, PYUSD, the MAS announcement puts additional pressure on the U.S. Congress to act,” said Chris Perkins, president and managing partner at investment firm CoinFund in an emailed comment.
- “While companies like Paypal and Circle have found a roadmap to issue stablecoins despite a lack of coherent, nuanced legislation in the U.S., we expect to see stablecoin activity and innovation move offshore if thoughtful policies are not passed in the U.S. immediately,” Perkins added.
- Last week, private wealth management firm Bernstein said it expects regulation to help grow tokenized stablecoins into a US$2.8 trillion market over the next five years.
- “Stablecoins are one of the most exciting areas of innovation across global finance as we enter an era of tokenization,” CoinFund’s Perkins said. “The stakes are high, and jurisdictions that get their policies right stand to benefit; those who do not will be left behind. ”
See related article: Singapore to require crypto firms to hold customer assets in a trust; restricts lending, staking by retail users
