Singapore Financial Regulator Publishes A Regulatory Framework for Stablecoins

Singapore Financial Regulator Publishes A Regulatory Framework for Stablecoins

On Tuesday, August 15, Singapore’s financial regulator released a new framework for stablecoins regulation. According to the Monetary Authority of Singapore, the released framework reveals requirements for stablecoin providers in the country. 

It focuses on privately issued stablecoins pegged to the Singapore dollar or other G10 currencies like the euro, USD, and British pound, whose circulation surpasses $3.7 million. This move places Singapore among the first countries to release a comprehensive framework for stablecoin regulation.

MAS Releases Stablecoin Regulatory Framework

It is also worth noting that Singapore is one of the most crypto-friendly jurisdictions globally, though it has strict regulations that actively penalize defaulters.

Notably, the latest framework outlines some key aspects to which stablecoin issuers must pay attention. The financial regulator will revoke stablecoin issuers’ licenses who fail to follow the guidelines.

Furthermore, the agency revealed in an tweet that the framework is part of its efforts to promote high-value stability for Singapore-regulated stablecoins. 

@MAS_sg has announced the features of a new regulatory framework that seeks to ensure a high degree of value stability for #stablecoins regulated in #Singapore.

— MAS (@MAS_sg) August 15, 2023

Ho Hern Shin, the MAS’s financial supervision deputy managing director, commented on the development. He explained that the framework focuses on facilitating the use of stablecoins as a reliable digital medium of transaction and a bridge between digital assets and fiat ecosystems. 

Shin enjoined stablecoin issuers in Singapore to gear up for compliance if they desired their stablecoins to be recognized as MAS-regulated. 

The New Stablecoin Regulatory Framework

According to the MAS, the regulatory framework highlights numerous requirements for Singapore-based stablecoin issuers. These include disclosures, redemption timelines, capital, redemption at par, and reserve management. 

Firstly, stablecoin issuers must revert the par value of the stablecoins to token holders within five working days from a redemptive request. Secondly, stablecoin issuers must have minimum liquid assets and base capital to minimize the risk of insolvency. This will facilitate an orderly shutdown of business operations if necessary.

Also, the framework mentioned the requirements for reserve assets. It says that reserve assets must meet certain requirements regarding composition, custody, valuation, and audit. That will provide a high level of assurance of value stability. 

And lastly, stablecoin issuers must offer proper disclosures to token holders and users. Such disclosures include details on the mechanism for stabilizing single-currency stablecoins (SCS). They must also provide information on audit results of reserve assets, including SCS holders’ rights.

The Monetary Authority of Singapore (MAS) also noted that stablecoin providers who comply with the newly-deployed framework can easily apply for MAS licenses. According to the Singaporean Central Bank, becoming MAS-regulated distinguished them from non-regulated stablecoin issuers. 

Moreover, the regulator cautioned that entities falsely presenting a token as MAS-permitted would encounter the penalties specified in the new framework. The accrued penalties include a fine or imprisonment and being included on a blacklist. 

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