The Monetary Authority of Singapore has proposed a dedicated stablecoin issuance license under amendments to the Payment Services Act 2019. Licensed issuers would have to maintain reserve assets worth at least the par value of tokens in circulation and would be barred from paying interest or other holding benefits.
The MAS consultation opened September 1 and accepts comments through October 16. The draft would put the regulator’s 2023 single-currency stablecoin framework on a statutory footing while adding licensing and systemic-risk powers.
Requirements for licensed issuers
An MAS-regulated stablecoin issuer would need reserves equal to at least 100% of outstanding par value at all times. Redemption requests would have to be completed in the pegged currency within timeframes prescribed by MAS.
The proposal prohibits interest, returns or other benefits tied to holding the token. MAS wants regulated stablecoins to function as payment instruments rather than savings or investment products. The authority is also seeking feedback on whether a minimum portion of reserves should be cash or bank deposits.
Applicants would be assessed on financial soundness, business viability and operating record. MAS expects to authorize only a limited number. Stress testing, recovery planning and orderly wind-down arrangements would form part of the regime, with additional liquidity or capital requirements possible where tests reveal weaknesses.
A systemic-stablecoin designation
The amendments would create a separate Designated Systemic Stablecoin category. MAS could restrict or suspend circulation in Singapore if a designated issuer failed to comply. Licensed digital-payment-token services could then be required to delist the asset.
The designation could reach tokens issued outside Singapore and tokens that track an asset or basket without using the stablecoin label. That gives the authority a way to address a widely used token whose issuer is not licensed locally.
Tracing and freezing capabilities
MAS proposed that issuers be able to trace, freeze or burn tokens associated with illicit activity. It is also consulting on stronger anti-money-laundering controls, including possible holder identification, monitoring of circulating tokens and restrictions involving unhosted wallets.
Those options remain proposals. Their final scope will affect whether a stablecoin can circulate permissionlessly and what information intermediaries or issuers must collect from holders.
What remains unsettled
The consultation does not set a final cash-reserve percentage or all capital requirements. Systemic designation and circulation restrictions would involve regulatory judgment, and detailed subsidiary legislation would follow a later consultation.
Issuers and exchanges therefore have a draft compliance map rather than final rules. The October 16 deadline is the immediate milestone; the final amendments will show how MAS balances redemption certainty, illicit-finance controls and access to self-hosted wallets.
Until MAS publishes its response and implementing text, firms cannot assume that every option raised in the consultation will become a binding obligation.
Sources & further reading
- BlockchainReporter — Adapted from: Singapore Proposes Stablecoin Issuance License With 100% Reserves
- Monetary Authority of Singapore — Primary consultation: Proposed stablecoin-regulation amendments