Hassan Maishera
TL;DR
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The Monetary Authority of Singapore has proposed amendments requiring regulated stablecoins to maintain reserves equal to at least 100% of their circulating supply.
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Issuers would have to separate reserve assets from corporate funds and hold them with licensed financial institutions.
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Stablecoin providers would be prohibited from paying interest, yield or other benefits tied to token holdings.
Singapore’s financial regulator has proposed amendments to the Payment Services Act that would impose stricter reserve and consumer-protection requirements on stablecoin issuers.
Under the proposal, issuers would need to maintain reserve assets equal to at least 100% of all stablecoins in circulation at all times. They would also be prohibited from offering interest, yield or other incentives linked to customers’ token balances.
The Monetary Authority of Singapore said the rules are intended to establish trusted stablecoins as payment and settlement assets rather than investment products.
Issuers Must Fully Back Stablecoins
MAS would require regulated issuers to maintain enough reserves to cover the entire value of their outstanding tokens.
The reserve assets would need to be held separately from the issuer’s corporate funds. Issuers could place them only with licensed financial institutions, reducing the risk that customer assets could be used for unrelated business activities.
These requirements are designed to ensure issuers can meet redemption requests while protecting reserve assets if a provider encounters financial difficulties.
Issuers would also need to safeguard funds received from customers while token redemptions are being processed.
The proposed framework would prevent issuers from paying interest or providing other benefits linked to the amount or duration of a customer’s stablecoin holdings.
MAS said stablecoins may serve as payment instruments but should not be marketed to the public as investments or products for generating returns comparable to bank deposits.
The regulator described its position as consistent with international regulatory practices.
The U.S. GENIUS Act and the European Union’s Markets in Crypto-Assets regulation also restrict stablecoin issuers from directly paying interest or yield.
MAS Sees Stablecoins as Settlement Assets
Ho Hern Shin, MAS deputy managing director for financial supervision, said well-regulated stablecoins could become reliable settlement instruments in tokenized financial markets.
“Trusted and well-regulated stablecoins can serve as a credible settlement asset in tokenized financial markets, while mitigating risks to users and the broader financial system,” she said.
The proposed rules seek to balance the potential benefits of stablecoin-based settlement with protections against liquidity, redemption and insolvency risks.
The consultation also considers recognizing a small number of foreign-issued stablecoins regulated under comparable overseas frameworks.
However, MAS has not yet determined how this recognition would operate in practice. Outstanding issues include how regulators would divide responsibilities for jointly issued stablecoins and whether existing Singapore-based issuers would receive transitional arrangements.
Further details could appear in subsidiary legislation or later consultations.
