Singapore explores framework for accepting certain internationally-issued stablecoins
The central bank is requesting public input on allowing recognition of select foreign-issued stablecoins that fall under comparable regulatory frameworks in other jurisdictions.
The city-state's Monetary Authority of Singapore (MAS) is revisiting its previous stance on stablecoins that are issued across multiple jurisdictions, putting forward a pathway for certain jointly issued tokens to become eligible under its regulatory structure.
On Tuesday, MAS launched a public consultation that encompasses legislative changes needed to put its stablecoin framework into practice, along with supplementary policy proposals that take into account developments that have occurred since 2023.
One of the proposals would allow stablecoins that are jointly issued by both a Singapore-based issuer and a foreign issuer to fall under the regulatory framework and carry the designation "MAS-regulated stablecoins," on the condition that the related risks are adequately addressed and mitigated.
The regulatory authority is also weighing the recognition of a select number of stablecoins issued by foreign entities that operate under comparable regulatory frameworks in their respective jurisdictions, pointing to their potential utilization in wholesale transactions conducted across borders.
These proposals represent a departure from the MAS's 2023 stance that stablecoins seeking qualification must be issued exclusively within Singapore. The authority had completed a framework during that year addressing single-currency stablecoins issued within Singapore and backed by either the Singapore dollar or any G10 currency.
During that period, MAS referenced challenges in establishing regulatory equivalence and fostering cooperation with jurisdictions in other countries. The regulator additionally highlighted technical obstacles in tracking the origin of commingled stablecoins and assessing whether reserves held overseas would prove adequate to fulfill redemption demands.
MAS proposes additional issuer safeguards
The wider consultation aims to put the 2023 stablecoin framework into effect through modifications to the Payment Services Act (PSA), which serves as the principal legislation governing payment services and their operators throughout Singapore.
The requirements being proposed encompass reserve-backed stability of value, capital requirements, par value redemption and disclosure obligations for issuers. Exclusively those issuers who have obtained licenses under the framework would be authorized to promote themselves as MAS-regulated stablecoin issuers and apply the label "MAS-regulated stablecoins" to their tokens.
MAS has further proposed banning issuers from offering interest payments on regulated stablecoins and mandating that they perform stress testing while maintaining both recovery plans and orderly wind-down strategies.
Further consumer protection measures would obligate issuers to safeguard customer funds that are received prior to the issuance of the corresponding stablecoins. Stablecoins that fall outside the dedicated framework would remain classified as digital payment tokens under the current regulatory rules.
MAS will be accepting public feedback and comments on these proposals through Oct. 16.