The Monetary Authority of Singapore (MAS) is consulting on proposed regulatory framework for stablecoin-related issuance and intermediation activities, with the comment period ending on December 21, 2022. Additionally, MAS published compliance toolkits to guide wholesale banks, full banks, and merchant banks in understanding and complying with the various MAS approval, notification, and reporting requirements and timelines. The addressed banking regulations cover, among others, liquidity risk, technology risk, credit risk, operational risk (including outsourcing), capital adequacy, corporate governance, fit and proper criteria, aspects of lending, anti-money laundering, and statistical returns. In another development, MAS and the China Banking and Insurance Regulatory Commission (CBIRC) agreed to deepen cooperation in areas such as green finance and supervisory technology at the 12th bilateral roundtable held on December 02, 2022.
With respect to the regulation of stablecoin activities, the MAS consultation paper sets out the policy thinking of MAS regarding the overall regulatory approach on the stablecoin-related activities and highlights the key requirements that will be imposed on such activities. MAS is of the view that stablecoins have the potential to be the medium of exchange to facilitate transactions in the digital asset ecosystem, provided they are well-regulated and are backed by arrangements that give a high degree of assurance of value stability. As part of this consultation, MAS proposes to introduce a new regulated activity of "Stablecoin Issuance Service" under the Payment Services Act 2019 to regulate Single-Currency Pegged Stablecoins (SCS) issued in Singapore. An entity that is based in Singapore and performs the function of controlling the total supply of, and minting and burning of SCS, will be regulated as a provider of "Stablecoin Issuance Service" (SCS Issuers). SCS may be issued by non-bank entities and banks. MAS will regulate the issuance of SCS where the value of SCS in circulation exceeds SGD 5 million. The proposed regulatory framework includes rules for treatment of non-bank versus bank SCS issuers, labeling of MAS-regulated SCS, reserve asset requirements of SCS, disclosure requirements, as well as prudential requirements. MAS proposes not to impose additional reserve backing and prudential requirements on banks that issue SCS by tokenizing liabilities of the bank because they are already subject to stringent risk-based capital and liquidity, money laundering and terrorism financing, technology risk management, and other requirements under the Banking Act.
Keywords: Asia Pacific, Singapore, Banking, Stablecoins, Regtech, Digital Assets, Disclosures, Complaince Toolkit, Basel, Outsourcing Arrangements, Compliance Risk, Sustainable Finance, Reporting, Lending, CBIRC, MAS
Previous ArticleEU Finalizes Directive on Credit Servicers and Credit Purchasers
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.