Singapore weighs recognizing some foreign-issued stablecoins
Singapore is considering allowing jointly issued cross-border stablecoins into its regulatory regime, revisiting its earlier decision to restrict the framework to domestic issuance.
Singapore is contemplating the possibility of recognizing certain foreign-issued stablecoins within its regulatory framework, a shift from its previous stance of only allowing domestically issued tokens. The Monetary Authority of Singapore (MAS) is currently conducting a public consultation to explore amendments to its stablecoin framework and additional policy measures in response to developments since 2023.
A key proposal suggests that some jointly issued stablecoins by Singapore and foreign entities could be regulated under the framework, earning the designation of "MAS-regulated stablecoins" if risk mitigation measures are robust enough. Another proposal considers allowing a select number of foreign-issued stablecoins, already governed by equivalent overseas regulations, to be recognized for cross-border wholesale transactions.
This revisits MAS's 2023 position that stablecoins must be domestically issued to qualify. The framework MAS finalized last year covered single-currency stablecoins issued in Singapore, pegged to the Singapore dollar or a G10 currency, but MAS faced challenges in ensuring regulatory equivalence with other jurisdictions and verifying sufficient reserves for redemption.
The consultation aims to implement the 2023 framework through amendments to the Payment Services Act (PSA), the primary legislation governing payment services in Singapore. The proposed requirements include reserve-backed stability, capital adequacy, redemption at par, and issuer disclosures. Only issuers licensed under the framework would be permitted to label their tokens as "MAS-regulated stablecoins."
MAS also proposes banning interest payments on regulated stablecoins and mandating stress tests, recovery plans, and orderly wind-down procedures. Additional consumer protections would require issuers to safeguard funds received before stablecoins are issued. Tokens outside the dedicated framework would continue to be classified as digital payment tokens under existing regulations. MAS is seeking public feedback on the proposals until October 16.
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