Singapore Banks Approved to Issue Stablecoins by MAS

The Monetary Authority of Singapore (MAS) has announced its intention to disclose feedback from its consultations on cryptocurrencies and stablecoins by mid-2023. This decision follows the central bank’s release of two consultation papers in October, seeking input on proposed regulatory measures aimed at safeguarding consumers from the potential risks of cryptocurrency trading and fostering the growth of stablecoins. The consultation period concluded on December 21st, with MAS Chairman Tharman Shanmugaratnam confirming that the authority received extensive feedback from a diverse array of respondents.

In response to a parliamentary inquiry on Monday, Shanmugaratnam clarified that MAS is currently assessing the feedback it gathered and plans to publish its response to the consultation feedback in the upcoming months. Proposed regulatory actions for crypto service providers included prohibiting the use of credit facilities and leverage for retail investors. For stablecoins, MAS aims to regulate the issuance of single currency-pegged stablecoins that have more than S$5 million (approximately US$3.7 million) in circulation.

A key highlight of MAS’s strategy regarding stablecoins is its intention to permit Singaporean banks to issue such digital assets. This provision is noteworthy as it establishes a regulatory avenue for banks to introduce digital currencies that are backed by traditional currencies, thereby positioning them in the digital asset market. Singapore has consistently regarded cryptocurrency as a high-risk investment, enforcing limitations on advertising and promotion of this sector and prohibiting cryptocurrency ATM services.

Through the regulation of stablecoin issuance, MAS aims to alleviate some of the challenges associated with digital assets while still encouraging innovation. Alongside regulating stablecoins, MAS is considering measures to ensure that these assets are held to the same anti-money laundering and counter-terrorism financing (AML/CFT) standards as traditional financial institutions.

In summary, MAS’s approach to cryptocurrency and stablecoins is a measured one, seeking to strike a balance between fostering innovation and safeguarding consumers while promoting financial stability. As the release of its consultation feedback approaches in mid-2023, stakeholders in the cryptocurrency sector will closely monitor Singapore’s regulatory stance on digital assets.

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