MAS revises stablecoin regulatory framework, prepares for industry consultation
Yong Hui Ting
THE Monetary Authority of Singapore (MAS) on Tuesday (Aug 15) revised its stablecoin regulatory framework, as it aims to maintain a higher degree of stability within stablecoin issuers.
MAS said it will also be moving on to the next phase of its legislative consultation to seek feedback from industry players, before finally proposing the changes to the Payment Services Act. The amendments, however, are not expected to come soon – at least not within the next year.
The changes include allowing stablecoin issuers to segregate customers’ stablecoins in either financial institutions licensed in Singapore or overseas-based custodians, with a minimum credit rating of “A-”.
These custodians must also have a branch in Singapore regulated by MAS to provide custodial services.
The changes add to a set of requirements already proposed in the October consultation last year. These stipulate that stablecoin issuers who wish to be labelled “MAS-regulated” must submit independent attestations of their reserves on a monthly basis to the central bank and upload them on their website.
They must also submit an audited report annually and have reserves equivalent to or more than the par value of their stablecoins in circulation at all times, valued on a mark-to-market basis daily, among others.
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Furthermore, they must maintain a minimum base capital and liquid assets, and return the par value of stablecoins to holders within five business days from a redemption request.
Only upon fulfilling these requirements would a stablecoin issuer (and their stablecoins) be labelled “MAS-regulated”. The framework, however, only applies to single-currency stablecoins, pegged to the Singapore dollar or any of the Group of 10 currencies.
MAS said the label would allow users to “readily distinguish MAS-regulated stablecoins from other digital payment tokens, including stablecoins which are not subject to MAS’ stablecoin regulatory framework”.
A stablecoin issuer who does not come under the framework proposed will still be regulated as a digital payment token service provider under the Payment Services Act.
“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 Ho Hern Shin, deputy managing director for financial supervision at MAS.
“We encourage single-currency stablecoin issuers who would like their stablecoins recognised as ‘MAS-regulated stablecoins’ to make early preparations for compliance.”
Amid concerns arising from heavy fluctuations in the value of stablecoins and following a series of collapses in the currencies, such as the Terra/Luna digital currencies, jurisdictions around the world have sought to keep a tighter watch on the coins’ issuers.
The UK, for example, last month approved a new bill to recognise cryptocurrencies, including stablecoins, as a regulated activity in the country.
Closer to home, the Hong Kong Monetary Authority is also in the process of seeking comments from the public regarding stablecoins. It aims to introduce a regulatory framework by the end of 2024.
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