Singapore’s central bank proposed a dedicated stablecoin issuance license on Sept. 1, moving a framework announced in 2023 closer to implementation through amendments to the Payment Services Act.
Summary
- Singapore proposes licensing stablecoin issuance under its Payment Services Act, with responses due October 16.
- Licensed issuers must maintain reserves covering at least 100% of outstanding stablecoins at all times.
- Only approved issuers could market qualifying tokens using Singapore’s protected MAS-regulated stablecoin designation legally domestically.
- MAS proposes banning issuer-funded interest or benefits calculated by reference to customers’ stablecoin holdings directly.
- Foreign stablecoins could receive limited recognition where overseas regimes provide sufficiently comparable regulatory safeguards overall.
The Monetary Authority of Singapore said issuers would need to maintain reserve assets covering at least 100% of their outstanding tokens. They must also support redemption at par and follow rules covering capital, disclosure and reserve management.
Only licensed issuers meeting the full framework could describe their tokens as “MAS-regulated stablecoins.” Tokens outside the regime would remain digital payment tokens subject to Singapore’s existing requirements.
The regulator is accepting feedback through Oct. 16. The proposals are not yet effective, and MAS has not announced a final implementation date.
Singapore stablecoin rules require full reserves
The framework covers single-currency stablecoins issued in Singapore and pegged to the Singapore dollar or a Group of Ten currency. Qualifying tokens must use reserve assets intended to maintain a stable value during normal and stressed market conditions.
MAS’s previously finalized policy requires reserves to equal or exceed the stablecoins in circulation. Eligible assets must be liquid and carry low credit and market risks. Reserve custody, valuation and independent attestations would support the backing requirement.
Issuers would also need to protect money received from customers before the corresponding stablecoins are issued. This requirement is intended to prevent customer funds from becoming exposed to the issuer’s other business activities during the issuance process.
The proposed framework maintains a five-business-day deadline for direct redemption requests. Issuers must return the token’s par value and disclose applicable redemption terms and fees in advance.
As previously reported, MAS established the framework’s central requirements in 2023. The latest consultation supplies the proposed legislative structure needed to bring that policy into the Payment Services Act.
MAS would prohibit interest linked to token holdings
MAS proposes stopping issuers from paying interest or providing other benefits calculated by reference to a customer’s stablecoin balance. The restriction applies to benefits tied directly to holding an MAS-regulated stablecoin.
The rule would preserve the tokens’ intended role as payment and settlement instruments rather than deposit or investment products. It could also reduce competition with bank deposits and discourage issuers from using higher-risk reserve investments to fund returns.
The proposal does not necessarily prevent an unrelated platform from offering separate rewards. The final treatment would depend on the arrangement, the party providing the benefit and whether the payment is effectively linked to the stablecoin holding.
Issuers would also face capital and solvency requirements. MAS’s finalized framework proposed minimum base capital of S$1 million or 50% of annual operating expenses, whichever is higher.
These requirements would sit alongside stress testing, liquidity management and recovery planning. An issuer would need an orderly wind-down plan explaining how customers could redeem their tokens if the business failed or stopped operating.
Foreign stablecoins could receive limited recognition
MAS is considering a route for stablecoins jointly issued by Singapore and foreign entities. Such arrangements could qualify when legal, operational and reserve risks across both jurisdictions are adequately controlled.
The regulator is also examining whether to recognize a limited number of foreign-issued stablecoins governed by comparable overseas frameworks. MAS identified cross-border wholesale payments as one area where recognition could be useful.
Recognition would not be automatic. MAS would need to assess whether the foreign regime offers safeguards comparable to Singapore’s standards, including reserve backing, supervision, redemption and financial-crime controls.
The proposal reflects a wider movement toward cross-border regulatory cooperation. In related coverage, New York and European regulators established a cooperation framework for stablecoin supervision while retaining their separate licensing powers.
Singapore’s approach also differs from recognizing every overseas license as equivalent. Limiting recognition would allow MAS to assess individual regimes while controlling the number of foreign stablecoins carrying regulatory status in Singapore.
Unlicensed tokens would remain available under DPT rules
Stablecoins that do not qualify for the MAS label would not automatically be prohibited. They would continue to be treated as digital payment tokens under the existing regulatory framework.
Service providers dealing in those assets would remain subject to applicable licensing, anti-money-laundering and consumer protection rules. However, they could not present those tokens as MAS-regulated stablecoins.
The distinction is intended to give users a clear regulatory marker. It does not mean MAS guarantees a licensed stablecoin, eliminates redemption risk or provides deposit insurance.
Industry participants have until Oct. 16 to comment on the legislative amendments and related policy measures. MAS will then review submissions before finalizing the bill and subsidiary requirements.
The remaining decisions include how foreign recognition will work, how jointly issued tokens will divide responsibilities and whether transitional periods will apply to existing Singapore-based issuers.
