The Monetary Authority of Singapore (MAS) on September 1 proposed amendments to the Payment Services Act 2019 that would create a dedicated stablecoin issuance licence, requiring issuers to hold reserve assets at least equal to the par value of every token in circulation and barring them from paying interest or other benefits to holders. The consultation paper also introduces a new “Designated Systemic Stablecoin” framework that would let the regulator restrict or suspend circulation of stablecoins judged to pose systemic risks, whether they are issued in Singapore or overseas.
Comments are open until October 16, and MAS said it expects to authorise only a limited number of issuers, assessing applications holistically on financial soundness, business viability, and operational track record. The proposal builds on the regulator’s voluntary 2023 framework for single-currency stablecoins, which the new amendments would give statutory force while adding requirements shaped by developments since then.
How the Proposed Licence Would Work
Under the draft rules, a licensed MAS-regulated stablecoin issuer would have to maintain reserve assets at least equal to 100% of the par value of outstanding stablecoins at all times and fulfil redemption requests in the pegged currency within MAS-prescribed timeframes. Issuers would be prohibited from paying interest, returns, or other benefits linked to holding the tokens, a restriction MAS said is meant to keep stablecoins a payment instrument rather than an investment or savings product. The paper also seeks views on requiring a minimum share of reserves to be held in cash or bank deposits, citing thresholds of 5% to 60% used in the United Kingdom and the European Union.
The amendments would define “stablecoin” and “MAS-regulated stablecoin” in law and clarify that stablecoins remain a subset of digital payment tokens. MAS said issuers should run regular stress tests and would gain powers to impose additional liquidity and risk-based capital requirements if those tests reveal vulnerabilities, alongside recovery and orderly wind-down plans.
A New Framework for Systemic Stablecoins
The second major change is a framework for designating stablecoins as systemically important. Issuers of a Designated Systemic Stablecoin would face requirements aligned with the licensed regime, and MAS could prohibit or suspend the stablecoin’s circulation in Singapore if the issuer fails to comply, potentially forcing licensed digital-payment-token providers to delist it. The designation power would apply to tokens issued offshore as well as domestically, and even to tokens not marketed as stablecoins but designed to track a reference asset or basket of assets.
MAS also proposed that stablecoin issuers have the technical ability to trace, freeze, or burn tokens linked to illicit activity, and is consulting on further anti-money-laundering measures such as verifying the identity of every holder, restricting unhosted wallets, and monitoring tokens in circulation.
What It Means for the Market
The proposal extends a regulatory push across Asia, where jurisdictions including Japan, Hong Kong, and South Korea have been tightening stablecoin rules. For issuers and exchanges, the practical question is whether the no-interest rule and reserve requirements will be seen as manageable compliance or as a reason to route issuance through other jurisdictions, especially as stablecoins edge closer to becoming a potential next trillion-dollar currency.
What remains unsettled is how strictly MAS will calibrate the rules in practice. The systemic designation and circulation-restriction powers are discretionary, and MAS has not set specific capital or cash-reserve thresholds, instead asking respondents for feedback. Submissions are due by October 16, and MAS said it will consult on subsidiary legislation at a later date, so the final rules could still diverge from what is now proposed.
