The Monetary Authority of Singapore (MAS) has proposed legislative amendments to the Payment Services Act that would introduce strict new rules for stablecoin issuers. Under the proposed framework, issuers operating in the country will be required to fully back their digital tokens with reserve assets and will be explicitly barred from offering yield or interest payments to token holders.
To protect consumers and maintain token stability, the central bank’s proposed guidelines stipulate that issuers must maintain reserve assets equal to at least 100% of all tokens in circulation at all times. These assets must be held in accounts separate from the issuers’ operational funds and safeguarded exclusively with licensed financial institutions. The regulations aim to provide robust redemption protections for holders of Singapore-regulated stablecoins by ensuring that adequate assets are preserved pending any redemption request.
According to a consultation paper released by the financial authority, stablecoins are intended primarily to function as a medium of payment rather than as investment products or yield-generating vehicles for the public. The proposed rules prohibit stablecoin issuers from paying interest or providing other benefits linked to holding the tokens, an approach the regulator notes aligns with international regulatory standards such as the United States’ GENIUS Act and the European Union’s Markets in Crypto-Assets (MiCA) framework.
The legislative amendments highlight that while stablecoins are expected to serve payment functions, they must not be utilized by retail investors to generate yield akin to standard bank deposits. Ho Hern Shin, Deputy Managing Director for Financial Supervision at MAS, emphasized that trusted and well-regulated stablecoins can act as credible settlement assets in tokenized financial markets while mitigating systemic and consumer risks.
The consultation paper also addresses potential limited recognition for select foreign stablecoins governed by equivalent international regulatory regimes. However, operational details regarding foreign recognition, joint-issuance responsibility sharing, and transitional arrangements for existing Singapore-based issuers remain to be determined.
This consultation builds upon initial proposals published in October 2022 and subsequent feedback responses released in August 2023. Public comments on the current consultation remain open until Oct. 16, after which MAS plans to consult separately on subsidiary legislation at a later date, with no formal implementation timeline specified yet.
The proposed statutory updates come as regulated stablecoins are undergoing real-world testing within Singapore’s financial ecosystem. Enterprise blockchain firm Ripple is currently evaluating whether its stablecoin, RLUSD, can replace legacy manual processes in cross-border trade settlements through MAS’s regulatory sandbox. The trials form part of initiative BLOOM, a central bank project focused on expanding tokenized settlement capabilities across bank liabilities and regulated digital currencies.
