Singapore is considering whether to admit some cross-border stablecoins into its regulatory regime, including certain tokens jointly issued by a Singapore entity and a foreign issuer.
The Monetary Authority of Singapore (MAS) opened a public consultation on Tuesday covering legislative amendments needed to implement its stablecoin framework, along with additional policy proposals that reflect developments since 2023.
Jointly issued tokens could qualify
Under one proposal, stablecoins jointly issued by a Singapore issuer and a foreign issuer could fall under the framework and be labeled “MAS-regulated stablecoins,” provided the associated risks are sufficiently mitigated.
MAS is also studying whether to recognize a limited number of foreign-issued stablecoins that are regulated under comparable overseas frameworks. The regulator said such tokens could have potential use in cross-border wholesale transactions.
Review of MAS’s 2023 position
The proposals mark a return to MAS’s 2023 stance that qualifying stablecoins must be issued solely in Singapore.
That framework, finalized in 2023, covers single-currency stablecoins issued in Singapore and pegged to either the Singapore dollar or a G10 currency.
At the time, MAS pointed to several obstacles, including difficulties in establishing regulatory equivalence and cooperation with other jurisdictions. It also cited technical challenges in tracing where commingled stablecoins originated and in determining whether overseas reserves would be sufficient to meet redemption requests.
Changes tied to the Payment Services Act
The wider consultation is meant to implement the 2023 stablecoin framework through amendments to the Payment Services Act (PSA), Singapore’s main law for payment services and operators.
The proposed rules cover reserve-backed value stability, capital, redemption at par and issuer disclosures. Only issuers licensed under the framework would be allowed to market themselves as MAS-regulated stablecoin issuers and label their tokens as “MAS-regulated stablecoins.”
Interest ban, stress tests and customer fund protection
MAS also proposed banning issuers from paying interest on regulated stablecoins. It wants issuers to run stress tests and maintain recovery plans as well as orderly wind-down plans.
Additional consumer safeguards would require issuers to protect customer money received before the corresponding stablecoins are issued.
Stablecoins outside the dedicated framework would continue to be treated as digital payment tokens under existing rules.
MAS is accepting public comments on the proposals until Oct. 16.