Key Takeaways
- The rules focus on enhancing the integrity of stablecoins pegged to the Singapore Dollar or major G10 currencies.
- To get “MAS-regulated” status, stablecoins should provide monthly submission of independent attestations of their reserves to the central bank
The Monetary Authority of Singapore (MAS) has unveiled a comprehensive regulatory framework aimed at bolstering the stability of single-currency stablecoins in a move announced on August 15th.
This initiative is particularly focused on enhancing the integrity of stablecoins pegged to the Singapore Dollar or major G10 currencies such as the euro, British pound, and United States dollar. The framework will come into play when the circulation of such stablecoins exceeds the threshold of $3.7 million (5 million Singapore dollars).
In a well-balanced approach between innovation and regulation, MAS has indicated its intention to proceed to the next phase of consultation, seeking valuable insights and feedback from key industry stakeholders. However, it’s important to note that the practical implementation of these changes is not anticipated to occur within the upcoming year.
One of the pivotal aspects of this new framework is the provision that allows stablecoin issuers to segregate their customers’ stablecoins. These can be held either within licensed financial institutions based in Singapore or entrusted to overseas custodians. These custodians, in turn, must adhere to specific criteria: maintaining a minimum credit rating of “A-” and operating under the regulatory purview of MAS within Singapore.
Among the mandates that stablecoin issuers must adhere to in order to obtain “MAS-regulated” status is the monthly submission of independent attestations of their reserves to the central bank.
These attestations must also be publicly available on the issuers’ websites. Furthermore, stablecoin issuers must undergo annual audits and uphold reserves equivalent to or exceeding the par value of their circulating stablecoins. These reserves must be subject to daily mark-to-market evaluations.
It’s crucial to highlight that the new framework carries significant consequences for those individuals or entities that falsely claim their tokens to be MAS-certified. Such parties will be subject to a range of penalties, which include fines, imprisonment, and inclusion in an alert list.
The formulation of this latest regulatory framework has been a meticulous process, thoughtfully incorporating feedback obtained from a public consultation held in October of the previous year.
A precedent for this endeavor was set in motion back in October when MAS initiated efforts to introduce a set of rules, including the establishment of capital and reserve requirements for stablecoin issuers.
