March 27, 2024
Altcoins News

Central Bank of Singapore Unveils Regulatory Framework for Stablecoins

The Monetary Authority of Singapore (MAS), which functions as the de facto central bank of the city-state, has introduced an updated regulatory framework for stablecoins. The objective of this framework is to ensure a significant level of stability in the value of stablecoins that fall under Singapore’s regulatory purview.

Unveiled on Tuesday, these fresh regulations will be applicable to single-currency stablecoins (SCS) linked to the Singapore dollar or any G10 currencies and issued within Singapore. Notable examples of such currencies include the euro, the US dollar, and the British pound. Unlike volatile cryptocurrencies like Bitcoin (BTC) or Ether (ETH), stablecoins are digital payment tokens (DPT) pegged to legal tender, maintaining a consistent value.

This new regulatory framework for stablecoins has taken into account feedback gathered from a public consultation held in October 2022 regarding regulatory strategies for stablecoin-related issuance and intermediary activities. In response to this input, the MAS has incorporated relevant suggestions into the final regulatory approach outlined in the document.

The central bank emphasized that stablecoin issuers seeking recognition by MAS must meet all stipulated requirements, including the maintenance of value stability and a minimum base capital. Once these prerequisites are fulfilled, stablecoin issuers can apply to MAS for approval and potentially receive a designation called the “MAS-regulated stablecoins” label.

Ho Hern Shin, the Deputy Managing Director at MAS, advised that SCS issuers aiming for recognition by the central bank should begin early preparations to ensure compliance. He noted that the regulatory framework for stablecoins is designed to facilitate their usage as a dependable digital medium of exchange, serving as a link between fiat and digital asset ecosystems.

However, entities issuing non-SCS stablecoins will continue to be subject to the existing regulatory regime for digital payment tokens.

In response to suggestions made during the consultation process, the MAS indicated a willingness to consider expanding the scope of stablecoins governed by the SCS framework in the future. This expansion would factor in developments within the stablecoin landscape and changes in associated risks. Some respondents highlighted that the current framework appeared limiting due to its focus solely on SGD and G10 currencies.

Addressing this concern, the central bank explained that the restriction to SGD and G10 currencies is motivated by the availability of high-quality liquid assets in these currencies. Such assets are deemed essential for maintaining a robust reserve backing for single-currency stablecoins.

Photo by Kin Pastor

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