Singapore’s central bank, MAS, introduces a pioneering regulatory framework aimed at strengthening single-currency stablecoins
In a significant move on Tuesday, the Monetary Authority of Singapore (MAS), the nation’s central bank, revealed a fresh regulatory framework to enhance the stability of single-currency stablecoins.
Under this groundbreaking initiative, the MAS intends to apply the framework to non-bank issuers of single-currency stablecoins pegged to either the Singapore Dollar or any fiat currency of the G10 nations. Notably, this will apply to stablecoins with a circulating value surpassing S$5 million, categorizing them as MAS-regulated stablecoins.
Nonetheless, for the framework to take full effect, the Monetary Authority of Singapore is poised to conduct legislative consultations, with amendments requiring parliamentary approval. Single-currency stablecoins, a subset of cryptocurrencies linked to conventional assets like national currencies, currently count only one introduction within Singapore. According to a recent report, a spokesperson from MAS said:
“When well-regulated to preserve such value stability, stablecoins can serve as a trusted medium of exchange to support innovation, including the ‘on-chain’ purchase and sale of digital assets.”
Singapore Forges Stablecoin Stability Amid Crypto Surge
In a statement addressing this pivotal development, the MAS highlighted the growing involvement of individuals in the crypto economy and the concurrent need for robust regulatory measures. With the stablecoin market presently valued at $125 billion, projections indicate rapid expansion over the upcoming decade. Recently, Bernstein’s research predicted a staggering 22-fold growth to $2.8 trillion in the global stablecoin market within the next five years.
In response to this shifting landscape, prominent economies, including Singapore and the United States, have embarked on regulatory journeys for stablecoins. Noteworthy financial institutions such as JPMorgan and the International Monetary Fund (IMF) have also actively contributed to shaping digital currency standards for Singapore.
Adherence to specific regulations is imperative for enterprises engaged in MAS-supervised stablecoin creation. These guidelines encompass maintaining the stablecoin’s value stability, ensuring adequate reserves for redemption requests, and transparent communication of audit findings to users.
Furthermore, the stipulations mandate these enterprises to uphold a portfolio of highly secure assets as reserves, valued at a minimum equivalent to their cumulative stablecoin issuance. A reserve fund of no less than S$1 million or exceeding half of their annual operating expenses must be maintained.
As the world embraces the evolving crypto landscape, Singapore’s forward-looking regulatory framework stands as a hallmark of proactive governance, poised to contribute to the burgeoning stability of single-currency stablecoins.