Stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to an external asset—such as a fiat currency, commodity, or financial instrument—to reduce price volatility. Examples include USDT, USDC, and XSGD/XSTD, which aim to track the US or Singapore dollar.
Reserve Requirements
Under the Monetary Authority of Singapore’s (MAS) new framework for single-currency stablecoins (SCS):
- Reserve assets must fully back each stablecoin in circulation (at least 100%) and be:
- Denominated in the same pegged currency.
- Held in cash, cash equivalents, or debt securities with residual maturities of up to three months, issued by governments, central banks, or internationally rated “AA‑” institutions
- All reserves must be held in segregated accounts, separate from the issuer’s own assets, and held by custodians licensed in Singapore or overseas custodians rated “A‑” with a MAS‑regulated Singapore branch
- Reserve holdings must be independently audited monthly, attested publicly, and annually audited
Issuance and Redemption
- A new “Stablecoin Issuance Service” has been added to the Payment Services Act 2019, requiring issuers of SCS to be licensed, provided they manage over S$5 million in circulation
- To qualify as an “MAS‑regulated stablecoin” (MRS), the stablecoin must be issued solely in Singapore and pegged to SGD or a G10 currency
- Redemption of the stablecoins must be available at par within five business days of a legitimate request, with any conditions disclosed upfront
- Issuers are restricted from offering other financial services—such as lending, staking, or trading other tokens—to contain risk exposure ]
Prudential and Capital Requirements
- Minimum base capital is set at S$1 million or 50% of annual operating expenses, whichever is greater
- Issuers must maintain liquid assets worth at least 50% of annual operating expenses or an amount sufficient for orderly wind-down
Scope of Regulation
- The framework applies only to SCS pegged to SGD or G10 currencies, and only if issued in Singapore and surpassing the S$5 million circulation threshold
- All other stablecoins, including multi-currency or algorithmic tokens (e.g., USDT or USDC issued abroad), remain under the generic digital payment token (DPT) regime within the Payment Services Act
- Only licensed providers can label their tokens as “MAS-regulated stablecoins”; misuse of the label may lead to penalties
Comparisons and Industry Context
- Singapore’s regulatory approach is among the world’s most advanced, comparable to frameworks in the EU, Japan, and Hong Kong .
- The MAS has highlighted that this regime aims to ensure stablecoins serve as a credible digital medium of exchange, bridging fiat and digital ecosystems
Summary Table
|
Requirement |
Description |
|
Pegged Currencies |
SGD or G10 only |
|
Reserve Assets |
100% backing in low-risk cash, equivalents, or ≤3-month government bonds |
|
Segregation |
Reserves must be separated and custodied under MAS standards |
|
Audits |
Monthly attestations, annual audit |
|
Base Capital |
≥ S$1 million or 50% Opex |
|
Redemption |
Par value within 5 business days |
|
Issuance Location |
Must be issued in Singapore |
|
Label Use |
“MAS‑regulated stablecoin” only for compliant issuers |
Final Thoughts
Singapore’s tailored regime for stablecoins—anchored in strong reserve backing, prudential safeguards, redemption guarantees, and precise licensing—ensures that MAS-regulated stablecoins are robust, transparent, and trustworthy. This framework fosters innovation in digital payments and supports token issuers who meet high standards.
If you’d like to explore how these regulations may impact your stablecoin project, compliance planning, or token design, feel free to contact us for specialised advisory services.