Singapore has unveiled an updated regulatory structure for single-currency stablecoins (SCS) to cement their credibility and boost digital-fiat convergence in the financial ecosystem.
The Announcement by MAS
On August 15, the Monetary Authority of Singapore (MAS) introduced a new guidelines set. These focus on non-bank stablecoins tied to the Singapore dollar and G10 currencies like the euro, pound, and the US dollar. Notably, these regulations target stablecoins with a circulation surpassing 5 million Singapore dollars (equivalent to $3.7 million).
Ho Hern Shin, the Deputy Managing Director of Financial Supervision at MAS, highlighted the dual objective of the framework. Firstly, it’s designed to endorse stablecoins as a trusted digital medium of exchange. Secondly, it is a conduit linking traditional fiat to the burgeoning digital asset world.
Shin emphasized the necessity for stablecoin issuers to brace for adherence. Only by complying can they earn the prestigious tag of being “MAS-regulated.”
Key Provisions For Singapore Outlined
The MAS has laid down stringent measures for stablecoin operators. These include:
- Value Stability: The framework mandates strict controls over reserve assets. These pertain to their composition, valuation, safekeeping, and regular auditing. The end goal? Ensuring unwavering value stability.
- Capital Resilience: To ward off insolvency risks and ensure an organized shutdown if needed, issuers must uphold a specified base capital and maintain sufficient liquid assets.
- Prompt Redemption: Upon receiving a redemption plea, issuers have a five-day window to reimburse the stablecoin’s par value to its holders.
- Full Disclosure: Transparency is pivotal. Issuers must share insights on the SCS’ value stabilization mechanisms, rights entitled to SCS holders, and audit findings of reserve assets.
Regulatory Badge of Honor
Achieving the “MAS-regulated” designation is no small feat. Issuers have to satisfy every stipulation in the refreshed framework. MAS sounded a stern warning against unauthorized claims of MAS certification. Errant parties face stringent penalties, including heavy fines, potential incarceration, and a spot on a public alert roster.
This revamped framework isn’t a sudden move. It comes on the heels of an extensive public consultation held in October 2022. MAS will conduct further consultations to cement these guidelines into law, followed by necessary legislative amendments in the parliament.
As the digital finance landscape evolves, Singapore’s proactive stance ensures user protection and clarity for stablecoin issuers. With these revised regulations, the city-state is poised to lead the charge in bridging the digital and fiat financial realms.
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