The Monetary Authority of Singapore (MAS) has released guidelines for the new regulatory framework for stablecoins issued in the city-state. The MAS took into account feedback from stakeholders in the October 2022 consultation. This aims to maintain the value stability of stablecoins.
The new framework is intended for single-currency stablecoins (SCS) pegged to the Singaporean dollar or any currency from G10 countries. It is also for stablecoins issued in the country.
What are the Requirements for Stablecoins?
Issuers need to comply with key requirements before their stablecoin can be called MAS-regulated. The label will allow consumers to readily distinguish regulated stablecoins from other forms of digital payments. A misrepresentation may be subject to penalties, which could include fines or imprisonment.
- Issuers must maintain a minimum base capital of S$ 1 million.
- Issuers are also required to have liquid assets to lower the risk of insolvency
- The issuer should return the par value of the stablecoin within 5 business days of the redemption request.
- The issuer should also disclose up front a reasonable redemption condition.
- There should also be a disclosure of the SCS’ value stabilizing mechanism, holder’s rights, and audit results of reserve assets.
According to Ms. Ho Hern Shin, Deputy Managing Director at MAS:
“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. We encourage SCS issuers who would like their stablecoins recognised as “MAS regulated stablecoins” to make early preparations for compliance.”
Singapore as a Crypto-friendly Jurisdiction
Singapore is a small nation in Southeast Asia. Unlike its neighbors, it does not have an abundance of natural resources. However, this did not stop the country from becoming a center for finance and innovation. Its new regulatory framework that governs stablecoin is an example of how this city-state has leveraged innovative technology to lift it onto the world stage.
Unlike the US, which has maintained its hostile treatment of digital assets, Singapore has instead crafted a framework to regulate businesses and protect consumers at the same time. What is surprising is, the pointers on the regulation are simple and practical. The MAS simply wants to make sure that stablecoins are backed with assets and redemption should be done without delay.
The US on the other hand is still trying to figure things out. Fortunately, some lawmakers are recognizing the importance of a clear framework for digital assets. The Lummis-Gillibrand Responsible Financial Innovation Bill was crafted to protect both innovations and customers at the same time.
Hopefully, other countries will take pointers from Singapore on how to regulate innovative technologies like crypto. It is not rocket science after all.
Source: MAS
Crypto is expanding real quick