Singapore’s financial regulator is proposing stricter rules for stablecoin issuers, including a requirement to hold reserves covering 100% of tokens in circulation and a prohibition on paying interest or other forms of yield.
The Monetary Authority of Singapore (MAS) wants to amend the Payment Services Act so issuers must maintain reserve assets equivalent to the full value of their outstanding stablecoins at all times.
The reserves would need to be kept separate from the issuer’s own assets and placed with licensed financial institutions. MAS said the requirement is intended to strengthen protections for stablecoin holders and ensure issuers have sufficient assets available when users request redemptions.
The regulator also wants stablecoins to remain focused on their role as payment instruments rather than becoming investment products. Under the proposed framework, issuers would not be allowed to pay interest or provide other benefits linked to the amount or duration of a customer’s stablecoin holdings.
MAS said this approach follows international regulatory standards. The US GENIUS Act and the European Union’s Markets in Crypto-Assets (MiCA) rules also prohibit stablecoin issuers from offering interest or yield.
“MAS’s stance remains that while stablecoins may be used for payments, they should not be used by the public as investment products or for the generation of yield, akin to bank deposit,” the proposed bill states.
Ho Hern Shin, MAS deputy managing director for financial supervision, said properly regulated stablecoins could become reliable settlement assets for tokenized financial markets while reducing risks to users and the financial system.
Foreign Stablecoins Could Get Limited Recognition
MAS is also considering a mechanism to recognize a limited number of foreign stablecoins that operate under overseas regulatory regimes deemed comparable to Singapore’s framework.
The consultation does not yet settle several practical questions, including how foreign stablecoins would qualify for recognition, how regulatory duties would be divided for jointly issued tokens and whether current Singapore-based issuers would receive a transition period.
MAS initially sought public feedback on its stablecoin framework in October 2022 and published its response in August 2023. The latest consultation will remain open through Oct. 16.
A separate consultation on subsidiary legislation is expected later, while MAS has not announced a specific date for implementing the new rules.
Singapore Tests Stablecoin Applications
The proposed framework comes as regulated stablecoins are being explored for real-world financial applications in Singapore.
Ripple is testing whether its RLUSD stablecoin can replace manual payment procedures that have contributed to delays in cross-border transactions. The project is taking place through Singapore’s central bank sandbox, which allows companies to test financial technologies within a controlled regulatory environment.
The experiment is part of BLOOM, an MAS initiative aimed at improving settlement infrastructure for tokenized bank liabilities and regulated stablecoins.
