MAS Consults on Framework for Stablecoin-Related Activities

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