Monetary Authority of Singapore reconsiders restrictions on multi-jurisdictional stablecoins

The Monetary Authority of Singapore (MAS) is reconsidering its earlier restriction on stablecoins issued across multiple jurisdictions, proposing a route for some jointly issued tokens to qualify under its regulatory framework.

MAS opened a public consultation on Tuesday, covering legislative amendments to implement its stablecoin framework and additional policy proposals reflecting developments since 2023.

Under one proposal, stablecoins jointly issued by a Singapore issuer and a foreign issuer could be regulated under the framework and labeled “MAS-regulated stablecoins,” provided that the associated risks are sufficiently mitigated.

MAS is also considering recognizing a limited number of foreign-issued stablecoins regulated under comparable overseas frameworks, citing their potential use in cross-border wholesale transactions.

The proposals revisit MAS’s 2023 position that qualifying stablecoins must be issued solely in Singapore. The regulator finalized a framework that year covering single-currency stablecoins issued in Singapore and pegged to the Singapore dollar or a G10 currency.

At the time, MAS cited difficulties establishing regulatory equivalence and cooperation with other jurisdictions. It also noted technical challenges in tracing where commingled stablecoins originated and determining whether overseas reserves would be sufficient to meet redemption requests.

MAS proposes additional issuer safeguards

The broader consultation seeks to implement the 2023 stablecoin framework through amendments to the Payment Services Act (PSA), the primary law governing payment services and operators in Singapore.

The proposed requirements cover reserve-backed value stability, capital, redemption at par and issuer disclosures. Only issuers licensed under the framework would be permitted to market themselves as MAS-regulated stablecoin issuers and label their tokens “MAS-regulated stablecoins.”

MAS also proposed prohibiting issuers from paying interest on regulated stablecoins and requiring them to conduct stress tests and maintain recovery and orderly wind-down plans.

Additional consumer safeguards would require issuers to protect customer money received before the corresponding stablecoins are issued. Stablecoins outside the dedicated framework would continue to be treated as digital payment tokens under existing rules.

MAS is accepting public comments on the proposals until Oct. 16.