Singapore weighs recognition of select foreign stablecoins

The Monetary Authority of Singapore has proposed rules to allow certain jointly issued stablecoins and a limited set of foreign-issued stablecoins to qualify as MAS-regulated stablecoins. The regulator opened a public consultation on the proposals, which runs until Oct. 16.

The consultation sets out legislative amendments to implement the stablecoin framework through the Payment Services Act. Proposed conditions for eligible stablecoins include clear reserve-backed value stability, issuer capital requirements, guaranteed redemption at par and transparent disclosures. Only firms licensed under the framework would be permitted to market tokens as MAS-regulated stablecoins or use that label.

MAS is revisiting a 2023 position that required qualifying stablecoins to be issued solely in Singapore. That earlier stance reflected difficulties in establishing regulatory equivalence with other jurisdictions, technical challenges in tracing the origin of commingled tokens, and uncertainty over whether overseas reserves could meet redemption requests. The current proposals would allow cross-border arrangements if safeguards address those risks.

Additional issuer obligations in the consultation include a prohibition on paying interest on regulated stablecoins, regular stress testing, and the maintenance of recovery and orderly wind-down plans. The regulator also proposes rules to protect customer funds received before tokens are issued so those funds are not exposed if an issuer fails. Stablecoins that do not meet the framework requirements would continue to be regulated as digital payment tokens under existing law.

The document also raises the possibility of recognising a small number of foreign-issued stablecoins that are supervised under overseas regimes MAS deems comparable. The regulator noted that such recognition could support cross-border wholesale transactions where large-value liquidity and settlement cross national boundaries.

MAS has invited feedback from industry participants, legal experts and the public on the scope of regulated stablecoins, criteria for cross-border cooperation, and the operational and prudential standards the framework should require. Responses to the consultation are being accepted until Oct. 16.

Background: In 2023 MAS set a framework covering single-currency stablecoins issued in Singapore and pegged to the Singapore dollar or a G10 currency, requiring robust reserve backing and clear issuer accountability. The current proposals keep the focus on reserve backing and redemption assurances while permitting limited cross-jurisdiction issuance and recognition where regulatory arrangements provide equivalent protections.