As the global cryptocurrency industry faces increasing rules and regulations in different parts of the world, Singapore has announced a stablecoin framework. The Monetary Authority of Singapore (MAS) announced the rules on Aug. 15, now allowing stablecoins to form part of the country’s existing financial system. The Singapore government began reviewing stablecoin rules in October last year. In the ten months since, the authorities have invited and reviewed public feedback, especially since stablecoins fall into the category of cryptocurrencies.
Stablecoins are essentially cryptocurrencies pegged to a reserve asset such as gold or fiat currency. Unlike regular cryptocurrencies, which are subject to market volatility, stablecoins pose less risk to investors because their underlying assets make them less vulnerable to sharp declines. Tether, USD Coin, and Binance USD are some examples of popular stablecoins.
MAS’ stablecoin regulatory framework is designed for single-currency stablecoins (SCS). According to the official statement of the Monetary Authority of Singapore, only stablecoins linked to the Singapore dollar or other G10 currencies such as the Australian dollar, US dollar, and British pound are eligible for MAS certification. authorities said.
“SCS reserve assets will comply with requirements related to their composition, valuation, custody and auditing to provide a high degree of assurance of value stability,” MAS said.
Web3 companies wishing to issue stablecoins in Singapore must ensure that they maintain a minimum base capital and liquid assets. The country’s goal is to avoid the risk of business closures and bankruptcy.
MAS has directed stablecoin issuers to return the value of the stablecoins to holders within five working days of submitting a redemption request.
“Issuers must provide users with appropriate disclosures, including information about the SCS value stabilization mechanism, SCS holders’ rights, and audit results of reserve assets. Only stablecoin issuers that meet all the requirements under this framework can apply to MAS for their stablecoins Recognized and labeled as a “MAS regulated stablecoin”,” the official document said.
Not all stablecoins will be regulated by MAS, and if any issuers are caught promoting stablecoins that are not certified by MAS, they will be penalized. The MAS will also place defaulted stablecoins on the investor alert list to warn potential investors.
MAS Deputy Managing Director (Financial Regulation) Ho Hern Shin said: “MAS’ stablecoin regulatory framework aims to promote stablecoins as a reliable digital medium of exchange and a bridge between fiat currencies and the digital asset ecosystem.”
In exploring the digital asset space, Singapore has taken a step-by-step and well-thought-out approach. Cryptocurrency and Web3 advocacy groups from India and Singapore signed a Memorandum of Understanding (MoU) last month. The Bharat Web3 Association (BWA) and the Blockchain Association of Singapore (BAS) have decided to join forces to nurture and grow the Web3 industry.
The MoU states that India and Singapore will leverage their respective expertise and resources to collaborate in promoting the development of the blockchain industry.
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