The Monetary Authority of Singapore has unveiled an updated set of regulations for stablecoins pegged to the Singapore dollar or major global currencies like the US dollar and euro. These new rules apply to privately issued stablecoins in circulation over 5 million SGD and are intended to promote stability and oversight in Singapore’s cryptocurrency sector.
According to the central bank’s deputy managing director Ho Hern Shin, the regulatory framework aims to enable stablecoins to be reliably used as digital money and facilitate interaction between traditional finance and the world of digital assets. By implementing prudent regulations around stablecoins, the central bank hopes to encourage adoption while still maintaining financial stability.
The new framework represents Singapore’s ongoing efforts to find the right balance in regulating the cryptocurrency space. By proactively developing rules for stablecoins, Singapore hopes to foster innovation in digital currencies while safeguarding the financial system and monetary policy. The central bank continues to take a forward-thinking yet cautious approach toward emerging crypto assets.
The Monetary Authority of Singapore’s deputy managing director Ho Hern Shin encouraged stablecoin issuers to comply with the new regulatory framework if they want their stablecoins to qualify as MAS-regulated.
The framework sets out several key requirements for stablecoin issuers:
- Reserves: Issuers must maintain reserves of assets that can assure value stability through composition, valuation, custody, and auditing standards.
- Capital: Issuers need minimum capital and liquid assets to reduce insolvency risk and enable orderly wind-down if necessary.
- Redemption: Stablecoins must be redeemable at par value by issuers within 5 business days upon request.
- Disclosure: Issuers have to provide users with information on the stablecoin’s value stabilization method, holder rights, and audit results of reserves.
Only stablecoin issuers meeting these framework conditions can apply to become MAS-regulated, a designation that will distinguish them from unregulated stablecoins for users, per the central bank.
The new requirements aim to ensure stability, transparency, and confidence in stablecoins seeking regulation in Singapore. By complying, issuers can gain MAS-regulated status for their stablecoins.
The Monetary Authority of Singapore cautioned that falsely claiming a stablecoin is MAS-regulated will lead to penalties under the new framework. These include fines, imprisonment, and being added to an alert list.
The updated stablecoin regulations incorporate feedback from a public consultation held in October 2022. Before full implementation, MAS will need to conduct further consultations and Singapore’s parliament must pass amendments to legally enforce the framework.
By outlining consequences for misrepresenting regulatory status, MAS aims to protect users from potential deception. The central bank is taking a measured approach by soliciting public input and requiring legislative approval to enact the stablecoin rules. This reflects Singapore’s balanced stance – facilitating crypto innovation through smart regulation while prioritizing financial stability.
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