Monetary Authority of Singapore’s Announcement
Singapore’s central bank has released a revised regulatory framework aimed at ensuring stability for single-currency stablecoins (SCS) regulated in the city-state.
Announced on Aug. 15, the framework targets non-bank issued stablecoins pegged to the value of the Singapore dollar or G10 currencies like the euro, British pound, and United States dollar with a circulation exceeding 5 million Singapore dollars ($3.7 million).
Purpose of the Framework
The bank’s financial supervision deputy managing director, Ho Hern Shin, highlighted the framework’s purpose: to support stablecoin use “as a credible digital medium of exchange and as a bridge between the fiat and digital asset ecosystems.” Shin urges stablecoin issuers to gear up for compliance to earn the “MAS-regulated” tag.
Key Framework Requirements
The framework emphasizes several criteria for stablecoin issuers:
- Value Stability: Reserve assets will adhere to stringent standards concerning their composition, valuation, custody, and audit. This will assure a high level of value stability.
- Capital: Issuers are mandated to maintain minimum base capital and liquid assets. This approach curtails the risk of insolvency and facilitates the systematic wind-down of operations if required.
- Redemption at Par: Issuers have the onus to return the par value of the stablecoins to holders within a window of five business days post a redemption request.
- Disclosure: Essential disclosures to users are imperative. Information concerning the SCS’ value stabilizing mechanism, rights of SCS holders, and the audit results of reserve assets must be transparently relayed.
The Road to MAS-Regulation
MAS underscores that only those stablecoin issuers in alignment with the new framework’s provisions can seek the MAS-regulated accreditation. This label will help users differentiate between regulated and non-regulated stablecoins.
There’s a stern warning in store too. Any entity misrepresenting a token as MAS-certified will face stringent penalties as enumerated in the new framework. The repercussions range from hefty fines to imprisonment and a spot on an alert list.
Feedback and Future Steps
The unveiling of the revised regulatory framework resonates with feedback from a public consultation conducted in October 2022. For the framework’s enforcement, MAS will initiate further consultations, and the parliament will need to green-light requisite amendments.