Nature of Stablecoins

Stablecoins are a new class of cryptocurrencies designed to maintain a stable value relative to another asset (typically a unit of fiat currency or commodity) or a basket of assets.

While there is no internationally-agreed definition for this broad class of cryptocurrencies, the Financial Stability Board (the “FSB”) has suggested that a 'stablecoin’ can be defined as a crypto-asset designed to maintain a stable value relative to another asset (typically a unit of currency or commodity) or a basket of assets. These may be collateralised by fiat currency or commodities, or supported by algorithms.

"Stablecoin" has not been defined in any written law in Singapore. MAS looks at its characteristics to determine whether it falls under the definition of "e-money" or "DPT". The following was provided by the MAS.

According to MAS (Consultation paper)
last revised 23 December 2019

[S]tablecoins have emerged as a new class of cryptocurrencies intended to be relatively stable in value to address concerns over excessive price volatility of the first generation of cryptocurrencies. By exhibiting characteristics typically associated with money, stablecoins may be blurring the line between our e-money and DPT regimes. While no internationally-agreed definition exists for this broad class of cryptocurrencies, the Financial Stability Board (the “FSB”) has suggested that a 'stablecoin’ can be defined as a crypto-asset designed to maintain a stable value relative to another asset (typically a unit of currency or commodity) or a basket of assets. These may be collateralised by fiat currency or commodities, or supported by algorithms.