Singapore proposes new stablecoin rules

Changes cover foreign token recognition, interest bans, and stress testing. 

The Monetary Authority of Singapore (MAS) is proposing new stablecoin rules covering cross-border recognition, interest restrictions and financial-stability safeguards under amendments to the Payment Services Act 2019.

The framework will cover locally issued single-currency stablecoins pegged to the Singapore dollar or any G10 currency, with only licensed issuers allowed to market their tokens as MAS-regulated stablecoins.

The regulator also proposes allowing jointly issued Singapore-foreign stablecoins to qualify under the framework if risks are sufficiently mitigated.

It is considering recognising a limited number of foreign-issued stablecoins governed under comparable overseas regulatory frameworks, particularly for cross-border wholesale use cases.

Moreover, it is further looking to prohibit interest payments on MAS-regulated stablecoins, alongside requirements for stress testing and recovery and orderly wind-down plans for issuers.

Additional safeguards under consideration include requiring issuers to protect customer monies received before stablecoins are issued.

The consultation will also cover requirements on value stability, capital, redemption at par and disclosure.

Stablecoins that are not regulated under the framework will continue to be treated as digital payment tokens and subject to existing consumer protection requirements, MAS said.

The regulator is seeking feedback on the legislative amendments and related policy measures until 16 October.