MAS Lays Out Stablecoin Requirements
Posted by Colin Lambert. Last updated: August 16, 2023
The Monetary Authority of Singapore (MAS) has published the features of a new regulatory framework that seeks to ensure a high degree of value stability for stablecoins regulated in Singapore.
The regulatory framework takes into account feedback received, following an October 2022 public consultation and will apply to single-currency stablecoins (SCS) pegged to the Singapore dollar or any G10 currency, that are issued in the city state.
Issuers of SCS must fulfill four key requirements. SCS reserve assets will be subject to requirements relating to their composition, valuation, custody and audit, to give a high degree of assurance of value stability. Issuers must also maintain minimum base capital and liquid assets to reduce the risk of insolvency and enable an orderly wind-down of business if necessary. They must also return the par value of SCS to holders within five business days from a redemption request.
Finally, issuers must provide appropriate disclosures to users, including information on the SCS’ value stabilising mechanism, rights of SCS holders, as well as the audit results of reserve assets.
The MAS says that only issuers that fulfil all requirements under the framework can apply for their stablecoins to be recognised and labelled as “MAS-regulated stablecoins”. This label will enable users to readily distinguish MAS-regulated stablecoins from other digital payment tokens, including “stablecoins” which are not subject to the regulatory framework.
Any person that misrepresents a token as an “MAS-regulated stablecoin”, may be subject to penalties under MAS’ stablecoin regulatory framework, and placed on MAS’ Investor Alert List, the central bank warns. It adds users should make their own informed decisions on the accompanying risks should they choose to deal in stablecoins that are not regulated under the framework.
“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,” says Ho Hern Shin, deputy managing director (financial supervision), MAS. “We encourage SCS issuers who would like their stablecoins recognised as “MAS regulated stablecoins” to make early preparations for compliance.”