Singapore's MAS Consults on New Stablecoin Issuer License, Interest Ban and 'MAS-Recognised' Status for Overseas Coins

The Monetary Authority of Singapore (MAS), Singapore's central bank and financial regulator, on September 1 local time released a consultation paper on amendments to the Payment Services Act to implement regulation of stablecoins, crypto assets designed to maintain the same value as a specified currency. The proposal would create a separate license for issuers of stablecoins that track the value of a single currency and allow only licensed issuers to use the term 'MAS-regulated.' Issuers would be required at all times to hold reserve assets equal to at least the face value of the coins in circulation, keep them in accounts segregated from their own funds, and place them only with authorized financial institutions. When users return coins, issuers would have to redeem them at the same face value within a period set by MAS and also comply with capital requirements and white paper disclosure obligations. The proposal would also prohibit providing holders with direct or indirect interest or returns merely for holding the coins. Coins issued overseas could receive 'MAS-recognised' status if local regulation is similar to Singapore's standards and cooperation between supervisory authorities is possible, while coins jointly issued in multiple countries would be considered for case-by-case exemptions under separate provisions. The proposal would also require a bank seeking to issue stablecoins to do so through a separate non-bank entity rather than the bank itself. Issuers would also need technology capable of tracing token transfers linked to crime and, when necessary, blocking transfers or removing tokens from circulation. If a stablecoin designated as capable of affecting payment systems because it is widely used violates the standards, MAS could instruct licensed Digital Payment Token (DPT) service providers to halt transaction support, delist trading pairs, and prohibit further acquisition. DPT service providers are firms licensed to offer the trading and transfer of digital tokens, such as crypto exchanges. The consultation runs until October 16, and no implementation date has been set, so these are proposals rather than rules currently in effect. The consultation concerns not only the size of reserves, but also which coins may use a regulated label and who can halt their circulation when problems arise.