The Monetary Authority of Singapore (MAS) published two consultation papers proposing regulatory measures for cryptocurrency trading and stablecoins that are to be part of the Payment Services Act.
MAS is of the view that cryptocurrencies, which it refers to as digital payment tokens or DPTs, are “highly risky and not suitable for the general public” though “it would not be feasible to ban them.”
As such, it proposes disallowing the use of credit facilities and leverage in retail DPT trading, and ensuring that DPT service providers adhere to business and technological standards similar to those faced by other financial institutions.
MAS will also regulate the issuance of stablecoins which are pegged to a single currency — referred to as single-currency pegged stablecoins or SCS — where the value in circulation exceeds S$5 million.
SCS issuers must hold reserve assets in cash, cash equivalents or short-dated sovereign debt securities that are at least equivalent to 100% of the par value of the outstanding SCS in circulation.
They must be denominated in the same currency as the pegged currency and all SCS issued in Singapore can be pegged only to the Singapore dollar or any Group of Ten (G10) currencies.
SCS issuers must also meet a base capital requirement of the higher of S$1 million or 50% of annual operating expenses of the SCS issuer at all times, and meet similar requirements for liquid assets.
“Regulations go hand-in-hand with innovation in financial services. The enhanced regulatory regime for stablecoins aims to support the development of value-adding payment use cases for stablecoins in Singapore.
As we continue to partner industry players to explore the potential benefits of tokenisation and distributed ledger technology, MAS will make appropriate adjustments to its regulatory regime to address the associated risks,”
said Ho Hern Shin, Deputy Managing Director (Financial Supervision), MAS.