Central bank reveals new regulatory framework for stablecoins

It seeks to ensure a high degree of value stability for regulated stablecoins.

The Monetary Authority of Singapore (MAS) said it has finalised the regulatory framework that will apply to single-currency stablecoins (SCS) pegged to the Singapore Dollar or any G10 currency issued in Singapore.

Stablecoins are digital payment tokens designed to maintain a constant value against one or more specified fiat currencies. 

“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 said in a statement.

The issuers of such SCS will have to fulfil key requirements relating to:

• Value stability: 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.
• Capital: Issuers must maintain minimum base capital and liquid assets to reduce insolvency and enable an orderly wind-down of business if necessary.
• Redemption at Par: Issuers must return the par value of SCS to holders within five business days from a redemption request.
• Disclosure: 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.

If stablecoin users wish to be labelled as regulated by MAS, they must fulfil all requirements under the framework. This recognition allows users to readily distinguish MAS-regulated stablecoins from other digital payment tokens, including “stablecoins” which are not subject to MAS’ stablecoin regulatory framework. 

Any person that misrepresents a token as a “MAS-regulated stablecoin,” may be subject to penalties under MAS’ stablecoin regulatory framework, and placed on MAS’ Investor Alert List. 

“Users should make their own informed decisions on the accompanying risks should they choose to deal in stablecoins that are not regulated under MAS’ framework,” added MAS.

These penalties could include financial penalties or imprisonment (in the case of an individual).