Singapore's financial regulator has proposed rules requiring stablecoin issuers to back tokens with reserves equal to at least 100% of tokens in circulation and to stop paying yield on holdings. The consultation, open until Oct. 16, also considers limited recognition for some foreign stablecoins, though no implementation date has been set.
The Monetary Authority of Singapore has proposed amendments to the Payment Services Act that would require issuers to fully back tokens with reserves and bar them from paying yield. Under the plan, issuers must maintain assets equal to at least 100% of all tokens in circulation at all times, held in accounts separate from their own funds and custodied only with licensed financial institutions.
Reserves rule aims to protect holders
The rules would require issuers to safeguard funds pending redemption, giving holders greater protection when cashing out a Singapore-regulated stablecoin. MAS said in its consultation paper that stablecoins should be used for payments, not by the public as investment products or to generate yield.
Yield ban follows US and EU precedent
The proposed rules would also bar issuers from paying interest or other benefits tied to customers' stablecoin holdings, an approach the regulator states is aligned with international regulatory practices. The US GENIUS Act and the EU's Markets in Crypto-Assets regulation both explicitly ban stablecoins from paying interest or yield. According to MAS: "stablecoins can serve as a credible settlement asset in tokenized financial markets", said Ho Hern Shin, the regulator's deputy managing director for financial supervision.
Separately, the consultation covers limited recognition for a small number of foreign stablecoins governed by comparable overseas frameworks. How that recognition would work in practice, how responsibilities would be divided for jointly issued tokens, and whether transitional arrangements would apply to existing Singapore-based issuers are yet to be determined.
Testing already underway in Singapore's sandbox
Regulated stablecoins are already being tested in the city-state. Ripple is exploring whether its stablecoin RLUSD can replace manual cross-border payment processes within MAS's central bank sandbox, part of the BLOOM initiative aimed at extending settlement capabilities for tokenized bank liabilities and regulated stablecoins.
MAS first consulted on stablecoin rules in October 2022. It published its response to feedback in August 2023. The current consultation closes Oct. 16, and the regulator will consult on subsidiary legislation separately at a later date.
Source: Monetary Authority of Singapore
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