Singapore's Monetary Authority Considers Recognizing Some Foreign-Issued Stablecoins
The Monetary Authority of Singapore (MAS) is reconsidering its earlier restriction on stablecoins issued across multiple jurisdictions by proposing a framework under which some jointly issued tokens can qualify as MAS-regulated stablecoins. MAS has launched a public consultation aiming to amend legislation to implement its stablecoin framework and reflect developments since 2023. A key proposal would allow stablecoins jointly issued by Singaporean and foreign issuers to be regulated under MAS standards and labeled accordingly, provided associated risks are adequately mitigated.
Background on Singapore's Stablecoin Regulation
In 2023, MAS finalized a framework covering single-currency stablecoins issued solely within Singapore and pegged to the Singapore dollar or a G10 currency.
At that time, the authority cited challenges in establishing regulatory equivalence and cooperation with overseas jurisdictions. It also noted technical difficulties in tracing the origin of commingled stablecoins and assessing whether foreign reserves would be sufficient to meet redemption demands.
New MAS Proposals for Jointly Issued Stablecoins
In the current public consultation, MAS proposes to allow regulation of stablecoins jointly issued by Singaporean and foreign issuers if associated risks are sufficiently mitigated.
These tokens would be eligible to be labeled as "MAS-regulated stablecoins," marking a shift from the previous policy stance.
Recognition of Foreign-Regulated Stablecoins
MAS is considering recognizing a limited number of foreign-issued stablecoins that are regulated under comparable overseas regimes, particularly given their potential use in cross-border wholesale transactions.
This reconsideration revises the earlier requirement that qualifying stablecoins be issued solely in Singapore.
Additional Issuer Safeguards and Consumer Protections
The proposals seek to implement the 2023 stablecoin framework via amendments to the Payment Services Act (PSA), the primary legislation governing payment services and operators in Singapore.
The requirements include reserve-backed value stability, adequate capital, redemption at par value, issuer disclosures, and a prohibition on paying interest on regulated stablecoins.
Issuers would be mandated to conduct stress tests and maintain recovery and orderly wind-down plans.
Consumer protections include requirements for issuers to safeguard customer funds received before issuing corresponding stablecoins. Stablecoins outside the MAS framework would continue to be treated as digital payment tokens under existing regulations.
Public Consultation and Timeline
MAS opened the public consultation on these proposals, accepting comments until October 16.
The regulator invites stakeholders and the public to provide feedback on the proposed legislative amendments and policies.
Why it matters
MAS's reconsideration of recognizing foreign-regulated stablecoins and jointly issued tokens signals an evolution in regulatory policy amid the rapidly changing crypto landscape. This could facilitate broader adoption of regulated stablecoins in cross-border financial transactions, which is critical for international trade and investment. The proposals enhance issuer requirements and consumer protections, strengthening trust in stable digital currencies and mitigating risks for markets and users. MAS's final decision will influence the global cryptocurrency regulatory environment, encouraging potential collaboration with other jurisdictions and standardization within the industry.
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