Does MAS view Stablecoins as E-money?
According to MAS (FAQs)
last revised on 7 March 2022
Stablecoins are not the same as e-money in the way that e-money is a digital representation of currency. Amongst stablecoins, SCS (Single Currency Stablecoins) whose value is purportedly fixed with reference to a single currency, appears closest to e-money. However, the exchange rate of the SCS to the currency is not fixed and can vary when traded on exchanges. This observation was similarly made by the Bank for International Settlements in its Working Paper on “Stablecoins: risks, potential and regulation”.
Given the nature of SCS, MAS treats SCS with the following characteristics as not being “pegged” by its issuer to a currency, and thus not meeting the definition of “e-money”:
i. the exchange rate of the SCS to the currency it references may vary, when used, traded or offered by third-party service providers; and
ii. a holder of the SCS need not have a contractual relationship or an account with the issuer of the SCS, to use the SCS.
Aside from SCS, other types of stablecoins also do not meet the definition of “e-money”. These include stablecoins whose values reference a basket of multiple currencies (e.g. one token = S$1 + US$1) or other assets (e.g. commodities), as well as stablecoins that aim to maintain stable values through algorithms that adjust the supply of the stablecoins in response to changes in the demand. Such stablecoins are neither denominated in nor pegged to a single currency by its issuer.
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.