MAS Consults on Stablecoin Rules Requiring Full Reserves and No Interest
Singapore's central bank opened consultation on September 1 for amendments that would mandate 100% reserves, segregated custody, and a ban on interest for MAS-regulated stablecoins.
The Monetary Authority of Singapore opened a public consultation on September 1 on amendments to the Payment Services Act that would implement the stablecoin framework finalised in August 2023.
Issuers seeking the MAS-regulated stablecoin label must hold reserve assets equal to at least 100 percent of outstanding tokens, marked to market daily, in segregated trust accounts custodied only with licensed Singapore or comparable overseas institutions.
Reserve assets must be liquid and low credit and market risk, with holders entitled to par redemption within five business days.
Outstanding questions
Issuers would be prohibited from paying interest or benefits calculated by reference to stablecoin holdings.
Additional requirements under consideration include mandatory stress testing, recovery and wind-down plans, and limited recognition for comparable foreign stablecoins.
Deputy managing director Ho Hern Shin stated the designation is a regulatory marker, not a guarantee or deposit insurance.
Consultation closes October 16 and covers single-currency stablecoins pegged to the Singapore dollar or a G10 currency and issued in Singapore.
Scope of foreign stablecoin recognition, joint-issuance responsibilities, and transitional arrangements for existing issuers remain undecided pending consultation feedback.