Singapore has become one of the first jurisdictions to finalize regulations for stablecoins, a type of digital currency designed to maintain a constant value against a fiat currency. The stablecoin market is valued at approximately $125 billion, with Tether’s USDT and Circle’s USDC dominating around 90% of the market cap. However, stablecoins are largely unregulated globally.
The Monetary Authority of Singapore (MAS) has introduced a framework outlining key requirements for stablecoin issuers. These requirements include holding reserves in low-risk and highly-liquid assets that equal or exceed the value of the stablecoins in circulation, returning the par value of the digital currency to holders within five business days of a redemption request, and providing appropriate disclosures, including audit results of reserves, to users.
These regulations will apply to stablecoins issued in Singapore that mimic the value of the Singapore dollar or any G10 currency. Stablecoins that meet these requirements will be recognized as “MAS-regulated stablecoins.”
Singapore has positioned itself as a digital currency hub, aiming to attract foreign firms and differentiate itself from the regulatory regime in the United States. Stablecoins like USDT and USDC have been crucial in cryptocurrency trading, allowing for seamless transactions between different digital coins without the need to convert back into fiat currency. However, there have been concerns about the transparency of stablecoin reserves, and Singapore aims to bring more clarity to the industry through its regulatory framework.
MAS’ stablecoin regulations aim to facilitate the use of stablecoins as a reliable digital medium of exchange and bridge the gap between fiat and digital assets. This move follows the collapse of algorithmic stablecoin UST, which lacked real-world assets in its reserves. Singapore’s stablecoin framework puts it ahead of other jurisdictions in establishing rules for stablecoins, with the UK recently passing a law to grant regulators oversight and Hong Kong undergoing a public consultation for future regulation.
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