The Monetary Authority of Singapore (MAS) has issued a fresh directive mandating all foreign-issued stablecoins to comply with the existing token regulatory framework.
The MAS indicated that enforcing the latest directive would subject the stablecoins to the regulations governing other digital assets projects. By doing so, MAS considers it will subject the stablecoins to a more stable city-state.
Singapore’s Stablecoin Regulation Incorporates Public Consultations
The development of the new framework targeting stablecoins issuance began in October 2022, with its design accommodating public input. The regulations published on Tuesday, August 15, on the MAS blog post will apply to the single-currency stablecoins (SCS). Besides requiring their issuance to be within Singapore, they apply to the SCS pegged to G10 currencies.
The new framework mandates stablecoin issuers to prioritize stability by maintaining adequate reserve assets. Also, it directs the stablecoin issuers to always have a minimum capital base and embrace liquid assets to lower insolvency risk.
New Framework Guaranteeing MAS-regulated Stablecoins
The regulatory framework demands that all SCS issuers promptly return the par value stablecoins within five business days when holders submit their redemption request. Additionally, the issuers should honor the disclosure requirements and mandatory audit of the reserve assets.
MAS revealed in the Tuesday, August statement that issuers meeting the requirements could apply for recognition as MAS-regulated stablecoins. The Singaporean regulator added that the framework targets facilitating stablecoin usable as both a credible and reliable digital medium of exchange.
MAS considers the regulatory framework would transform the stablecoins into a reliable bridge linking fiat to the digital asset ecosystems. The deputy managing executive in financial supervision of MAS urges the SCS issuers to initiate compliance preparations towards ensuring their stablecoins garner the MAS-regulated label.
Singapore to Allow Other Stablecoins to Operate
In a subsequent response to the public consultation, MAS ruled out dismissing other stablecoins types. Its publication on Tuesday, August 15, indicated that MAS does not prohibit other stablecoins types from issuance, use, or circulation in the country.
MAS indicated that the stablecoins, including the foreign single-currency pegged to other assets and currencies, will be regulated within the Digital Payment Token (DPT) regulatory framework. Nonetheless, the financial watchdog assured it could incorporate other token types within the SCS framework.
The announcement by MAS comes when US-based stablecoin issuers are seeking international markets. US-based duo Circle and Paxos revealed in 2022 their approval to operate within Singapore.
Paxos secured the MAS license allowing the US-based firm to offer blockchain products and digital asset services under the Payment Services Act 2019. On the other hand, the Circle secured the major payment institution (MPI) license. The USDC stablecoin issuer would offer cross-border and local money transfer services within Singapore through the Circle account.
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