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Singapore Announces Minimum Reserve in Single-Currency Stablecoin Regulatory Framework

Minimum reserves, capital requirements, redemption rules, and geographical restrictions are all part of MAS's new single-currency stablecoin framework

Photo by Meriç Dağlı / Unsplash

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The Monetary Authority of Singapore (MAS) has introduced a regulatory framework for the country's single-currency stablecoins.

Its revised framework will apply to non-bank entities that issue stablecoins pegged to the Singapore dollar or certain G10 currencies with a circulation higher than S$5 million. Approved coins will be labelled as MAS-regulated stablecoins.

"When well-regulated to preserve such value stability, stablecoins can serve as a trusted medium of exchange to support innovation, including the 'on-chain' purchase and sale of digital assets," said the MAS in a statement on Tuesday.

StraitsX is currently the only firm to offer a stablecoin pegged to the Singdollar, XSGD.

The new framework, which will be rolled out later this year, include:

  • Minimum Reserves: Issuers must also be able to maintain a portfolio of reserve assets "with very low risk" and at least 100% of the outstanding single-currency stablecoins in circulation.
  • Segregated Reserves: Issuers must hold reserve assets in segregated accounts from their own assets. This could also be in overseas custodians that have a minimum credit rating of A- with a branch in Singapore.
  • Capital Requirements: A minimum base capital higher than S$1 million or half of annual operating expenses must be maintained.
  • Redemption: Issuers must reimbursement of stablecoins at par value to holders within five business days of the redemption request.
  • Singapore Only: Stablecoin issuers must operate solely from Singapore.

MAS has been warming towards Web3. Recently, the regulator launched a S$150 million technology and innovation fund.

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The announcement comes just one month ahead of the highly anticipated Token2049 event in Singapore, which brings together crypto industry leaders from around the world.