Singapore Moves Closer to Adopting Stablecoin Regulatory Framework

Singapore’s financial regulator is closer to implementing a regulatory framework for stablecoins.

The Monetary Authority of Singapore (MAS) on Tuesday (Sep. 1) published new proposed legislative amendments to the Payment Services Act, which would establish ways for stablecoin issuers to become MAS-regulated.

“MAS’ proposed legislative amendments will give effect to a stablecoin framework that promotes responsible financial innovation,” said Ho Hern Shin, the authority’s deputy managing director for financial supervision.

“The framework will provide clear regulatory guardrails for stablecoins that meet high standards of value stability and governance. This is important as asset tokenization gains traction. 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.”

Among MAS’ proposed changes are a ban preventing stablecoin issuers from paying interest on regulated stablecoins, a requirement for stress testing and to “have in place plans for recovery and orderly wind-down of MAS-regulated stablecoin issuers.”

In addition, the proposed amendments would permit foreign stablecoin issuers to seek MAS recognition, provided they are covered by similar regulations in their home country.

MAS’ efforts come as jurisdictions around the world move to establish their own stablecoin regulations. The coins are regulated in the Europe Union under the Markets in Crypto-Assets (MiCA) regulation, and under the Genius Act in the U.S.

In related news, PYMNTS wrote last week about Visa’s entry into the MAS BLOOM initiative, an experiment aimed at linking traditional payment systems and stablecoin-based settlement rails.

Visa’s plans, that report said, “include testing settlement using regulated dollar- and euro-denominated stablecoins,” while BLOOM is testing how tokenized bank liabilities, regulated stablecoins and established payment networks can coexist.

“For corporate treasurers, another stablecoin pilot is not the interesting part. It is whether the networks carrying these new forms of money will actually talk to one another,” PYMNTS wrote.

In the end, a multinational doesn’t care whether the technology behind a $20 million supplier payment is “intellectually elegant,” that report said, but whether value can move from the company’s bank account in New York to a supplier overseas on time and securely.

“That requires more than issuing a token. It requires conversion, FX, compliance, liquidity, settlement and connectivity,” the report added. “Visa’s arrival to the BLOOM project pushes the question one step further: what happens when a global network built around conventional payments becomes a bridge into tokenized settlement rather than being replaced by it?”