Singapore Introduces New Regulatory Framework for Stablecoins
Regulators in Singapore are opening up to stablecoins based on the changing policies. Recently, Monetary Authority of Singapore (MAS) has introduced a new regulatory framework for streamlining stablecoins under their jurisdiction. The Central Bank approved the regulatory documents concerning the legal direction and guidelines for the country.
Under the tenets mentioned in the new framework, the government of Singapore is going to make significant changes concerning stablecoins related to custodial and issuance parameters.
On this account, legislators have also published a detailed consultation paper on the matter. This paper describes the requirements and legal parameters that stablecoin issuers need to comply with.
At the same time, regulators have also opened the floor for the audience to comments and opinion on the matter. Such that the regulators have maintained that inviting feedback from the relevant parties is going to ensure better compliance and stability for stablecoin projects in the region.
Single-Currency Stablecoins
The regulatory framework for stablecoins is currently applicable on single-currency stablecoins or SCSs only. These SCSs are pegged to the legal tender of Singapore and G10 nation currencies such as USD.
At the same time, it will cover stablecoins that are issued by non-banking enterprises and have a circulation surplus of more than $3.7 million translated into 5 million Singaporean dollars. At the same time, stablecoin issuers falling into this category must apply for Major Payment Institution or MPI licensing.
Under these guidelines, the stablecoin issuers are going to hold the reserves in the form of fiat currency reserves in the form of segregated accounts. The approved custodian of the reserve asset will work in tandem with certified financial institutions.
At the same time, the overseas custodians must have at least AA- ratings. Furthermore, the foreign custodians should also have a registered and regulated branch office in Singapore.
The Monetary Authority of Singapore operates as the Central Bank in the island nation. Under the new regulatory details, the federal entity has ordained that stablecoins must carry out a monthly audit submitted by third-party.
The MAS has also decreed that the monthly audit report is to be posted and updated on their official website within the assigned timeline. Furthermore, the stablecoin issuers are directed to respond affirmatively regarding all redemption requests.
The timeline to reimburse every redeeming applicant is set no more than five business days. MAS have maintained that stablecoins are going to play an important role in the development of economy and act as a viable medium of exchange.
The regulatory framework seems to be in line with the philosophy of Senator Patrick McHenry who has declared that stablecoins can become the foundation for 21st century payments conditioned with clear regulations. It is worth noting that the House Financial Services Committee is working on approving a stablecoin legislature.
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