On Tuesday, August 15, the Monetary Authority of Singapore (MAS), the country’s central bank, released a new regulatory framework in order to boost the stability of single-currency stablecoins.
MAS said that the framework will be applicable to the non-bank issuers of single-currency stablecoins pegged to the Singapore Dollar or any fiat of the G10 countries, with a circulation value exceeding S$5 million. the central bank would label these coins as MAS-regulated stablecoins.
However, to bring the framework into force, the Monetary Authority of Singapore will need to hold legislative consultations before the Parliament passes the amendments. Single-currency stablecoins belong to a category of cryptocurrencies tied to conventional assets such as national currencies. Currently, Singapore has only introduced one stablecoin. Speaking on the development, the MAS noted:
“When well-regulated to preserve such value stability, stablecoins can serve as a trusted medium of exchange to support innovation, including the ‘on-chain’ purchase and sale of digital assets”.
Singapore and Crypto Regulations
With the growing participation of individuals in the crypto economy, governments are staying upbeat about regulating crypto markets. Also, the stablecoin market, currently valued at $125 billion is likely to grow rapidly over the next decade. Earlier this month, a Bernstein research report noted that the global stablecoin market could grow by 22x to $2.8 trillion just within the next five years.
Thus, top economies like Singapore and the US are already seeking to regulate stablecoins. Some of the top financial institutions like JPMorgan and the IMF have also contributed to setting up digital currency standards for Singapore.
Companies that create stablecoins and supervised by the MAS need to meet certain rules. These rules also involve keeping the value of the stablecoin steady, having enough money set aside for redemption requests, and telling users about audit findings.
The rules also say that these companies must have a collection of very safe assets in reserve, worth at least the same as all the stablecoins they have made. They should also have a minimum amount of money set aside, more than S$1 million or half of their yearly operating expenses.
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