Nature of Stablecoins

The regulatory frameworks for e-money based payment services and DPT services, including the differences in regulatory treatment, were developed before stablecoins emerged.

Accordingly, MAS is currently reviewing whether the existing regulatory regime set out in the PS Act is relevant and appropriate going forward, with the possible advent of global stablecoins.

MAS has proposed measures to regulate stablecoin issuers. So far, stablecoins do not fall under the definition of e-money. Upon an assessment of the coins characteristics, it might fall under the definition of DPT. 

According to MAS (FAQs)
last revised on 7 March 2022

MAS therefore expects that in general, stablecoins, including SCS, will not meet the definition of “e-money”. Stablecoins may meet the definition of “digital payment token”. MAS takes a technology-neutral stance and will examine the characteristics of the stablecoin to determine the appropriate regulatory treatment. USD Coin and Tether are examples of SCS which, based on their characteristics today, are considered DPTs. Entities which provide DPT services will be regulated accordingly under the PS Act. Requirements applicable to entities that provide DPT services, such as the relevant risk disclosure requirements under PSN08, would thus apply. Entities providing services relating to stablecoins should also consider if their activities and products may be caught under other regulatory requirements such as those under the SFA.

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In October 2022, MAS proposed new measures to regulate stablecoin issuers. 

According to MAS (Media Releases)
last revised 26 October 2022

Stablecoins have the potential to be a medium of exchange to facilitate transactions in the digital asset ecosystem, provided they are well-regulated and securely backed. The current regulatory framework, which primarily addresses money laundering and terrorism financing risks, and technology and cyber risks, will be expanded to ensure that regulated stablecoins have a high degree of value stability.

MAS will regulate the issuance of stablecoins which are pegged to a single currency (“SCS”) where the value of SCS in circulation exceeds S$5 million. The key proposed issuer requirements relate to –

• Value Stability
• Reference Currency
• Disclosures
• Prudential Standards