The Monetary Authority of Singapore (MAS) has on Tuesday published a consultation paper on proposed legislative amendments to the Payment Services Act 2019 (PS Act) to implement MAS’ regulatory framework for stablecoins in Singapore.
The amendments will set out how stablecoin issuers may qualify to be MAS-regulated, and the safeguards they must meet to support value stability and user protection, the central bank said in a statement.
The MAS Single-Currency Stablecoin (MAS-SCS) framework permits only issuers licensed under the framework to describe themselves as licensed MAS-regulated stablecoin issuers and represent their stablecoins as “MAS-regulated stablecoins”.
This helps users distinguish well-regulated stablecoins from other cryptocurrencies that purport to be “stablecoins” but are not subject to MAS regulation to keep their value stable.
Non-MAS regulated stablecoins will be treated as Digital Payment Tokens (DPTs) and be subject to the same consumer protection safeguards that apply to DPTs.
The consultation paper seeks feedback on the proposed legislative amendments to implement the MAS-SCS framework, including key requirements relating to value stability, capital, redemption at par and disclosure.
MAS additionally seeks feedback on policy positions in further areas, taking into account recent developments and best practices in stablecoin regulation internationally.
These include multi-jurisdictional issuance of stablecoins; recognition of foreign-issued stablecoins; additional requirements to safeguard financial stability; additional consumer protection safeguards.
MAS proposes to allow stablecoins that are jointly issued by a Singapore and foreign issuer to be regulated under the MAS-SCS framework, and labelled as “MAS-regulated stablecoins”, provided that risks are sufficiently mitigated.
Meanwhile, recognizing cross-border wholesale use cases of stablecoins, MAS proposes to recognize a limited number of foreign issued stablecoins regulated under a comparable foreign regulatory framework.
MAS also proposes several enhancements to the MAS-SCS framework, including the prohibition of interest to be paid on MAS-regulated stablecoins, the requirement for stress testing, and to have in place plans for recovery and orderly wind-down of MAS-regulated stablecoin issuers.
MAS also proposes to impose safeguards similar to those applicable to existing PS Act licensees, including the requirement to safeguard customer’s monies received before the stablecoins have been issued.
“MAS’ proposed legislative amendments will give effect to a stablecoin framework that promotes responsible financial innovation. The framework will provide clear regulatory guardrails for stablecoins that meet high standards of value stability and governance,
“This is important as asset tokenization gains traction. Trusted and well-regulated stablecoins can serve as a credible settlement asset in tokenized financial markets, while mitigating risks to users and the broader financial system,” said Ho Hern Shin, MAS Deputy Managing Director (Financial Supervision).
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