As fintech innovation accelerates and global economic dynamics evolve, governments worldwide are recognizing the transformative potential of stablecoins. Jurisdictions such as the European Union, the United States, Singapore, and Hong Kong have launched consultations and legislative initiatives to position themselves at the forefront of digital finance. On August 15, 2025, the Monetary Authority of Singapore (MAS) finalized its comprehensive regulatory framework for stablecoins, making Singapore one of the first jurisdictions globally to formally regulate these digital assets. This landmark move sets a precedent for other regulators and offers valuable insights into the future of global stablecoin oversight.
Key Components of Singapore’s Stablecoin Regulation
The MAS stablecoin framework builds upon earlier regulatory efforts, beginning with the Payment Services Act (PS Act) introduced in December 2019. A public consultation in December 2022 sought feedback on proposed rules, culminating in the finalized framework released in August 2025. The complete regulatory regime integrates provisions from these three key stages and establishes clear guidelines across several critical areas.
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1. Applicability and Scope
One of the most notable aspects of Singapore’s approach is its openness to multi-currency stablecoins. MAS permits the issuance of Single-Currency Stablecoins (SCS) pegged to the Singapore Dollar (SGD) and the G10 currencies—major global fiat currencies including the US Dollar, Euro, Japanese Yen, and British Pound.
This represents a significant policy shift. By allowing stablecoins to be anchored to foreign currencies, MAS demonstrates regulatory flexibility and international foresight. It acknowledges the global nature of digital finance while maintaining oversight through stringent compliance standards.
Issuer Classification
Stablecoin issuers are divided into two categories: banks and non-bank entities.
- Non-bank issuers: Only those with a circulating supply exceeding SGD 5 million must comply with the full stablecoin regulatory framework and obtain a Major Payment Institution (MPI) license under the PS Act. Smaller issuers fall under simpler Digital Payment Token (DPT) service regulations.
- Banks: Initially considered for inclusion via tokenized deposits, banks were ultimately excluded from this category due to fundamental differences in asset-liability structure. However, if banks choose to issue stablecoins, they must ensure 100% asset backing—though they are exempt from obtaining an MPI license, as existing banking laws already impose rigorous capital and operational standards.
This dual-track system reflects MAS’s balanced approach: encouraging innovation while ensuring systemic stability.
2. Reserve Management Requirements
To safeguard user confidence and prevent liquidity crises, MAS has implemented strict rules on reserve composition, custody, and transparency.
Permitted Reserve Assets
Reserves must consist exclusively of:
- Cash or cash equivalents
- Bonds with a residual maturity of no more than three months
- Instruments issued by governments, central banks, or international institutions rated AA- or higher
Notably, MAS explicitly excludes money market funds from qualifying as cash equivalents. This means popular models like USDC (which allocates a large portion of reserves to money market funds) or USDT (which includes commercial paper) would not meet MAS standards unless adjusted.
Custody and Segregation
Issuers must establish a trust structure with segregated accounts to legally separate customer reserves from corporate assets. Custodians must either:
- Hold a custodial services license in Singapore, or
- Be an overseas institution with a local branch and a credit rating of at least A-
This requirement ensures that third-party custodians are reputable and subject to effective supervision.
Operational Transparency
Additional operational mandates include:
- Daily valuation of reserves must equal or exceed the outstanding SCS supply
- Redemption must occur at face value
- Processing time for redemptions cannot exceed five business days
- Monthly audited reserve reports must be published on the issuer’s official website
These measures promote accountability and real-time trust in the system.
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3. Issuer Qualifications and Business Conduct
Beyond reserves, MAS imposes robust prudential standards on stablecoin issuers to ensure long-term viability and risk containment.
Minimum Capital Requirements
Issuers must maintain base capital of:
- At least SGD 1 million, or
- 50% of annual operating expenses (OPEX), whichever is higher
This ensures sufficient financial buffer against operational shocks.
Solvency Standards
Liquidity assets must cover at least 50% of annual OPEX or sufficient funds to meet normal withdrawal demands—verified independently. Qualifying liquidity assets include:
- Cash and cash equivalents
- Government debt
- Large-denomination certificates of deposit
- Money market funds (for solvency purposes only)
Business Activity Restrictions
To prevent risk concentration and speculative behavior, issuers are prohibited from engaging in:
- Lending
- Staking
- Asset management
- Trading activities
- Owning equity in other companies
However, they may offer stablecoin custody and transfer services to buyers. Importantly, issuers cannot pay interest on holdings through lending or staking—but third parties (including non-affiliated sister companies) may offer such services separately.
This separation prevents conflict of interest while preserving ecosystem innovation.
4. Additional Regulatory Safeguards
While less prominent, MAS also mandates compliance in:
- Public disclosure practices
- Anti-money laundering (AML) and counter-terrorism financing (CTF)
- Cybersecurity protocols
- Intermediary licensing for exchange and wallet providers
These reinforce overall system integrity without introducing undue complexity.
Evaluating Strengths and Gaps in the Framework
Advantages of MAS Regulation
Regulated stablecoins benefit from enhanced credibility:
- They can carry the official “MAS-Regulated Stablecoin” label, distinguishing them from unregulated counterparts
- Financial institutions are more likely to support their onboarding and offboarding processes
- Users gain greater confidence due to transparent auditing and reserve verification
This positions compliant stablecoins as preferred instruments for institutional adoption and cross-border payments.
Challenges and Limitations
Despite its rigor, the framework faces practical hurdles:
Reserve Currency Mismatch
MAS expects reserve assets to match the pegged currency (e.g., SGD-backed coins should hold SGD-denominated assets). However, this limits investment options and reduces attractiveness—especially for users preferring USD liquidity. While MAS acknowledges the issue, it stops short of permitting multi-currency reserves, leaving issuers to manage currency risk internally.
Cross-Jurisdictional Enforcement
Global stablecoins operate across multiple blockchains and regions. MAS initially proposed requiring proof of equivalent compliance abroad or regulatory cooperation agreements—but both approaches proved unfeasible. As a result, issuers are currently barred from cross-border issuance under the framework, potentially undermining competitiveness.
Systemically Important Stablecoins
Though discussed in earlier consultations, MAS has deferred regulation of large-scale, systemically important stablecoins. Given their potential impact on financial stability, this remains a critical gap awaiting future clarification.
Who Benefits Most from This Framework?
Given the high barriers to entry—including MPI licensing (which takes 1–2 years), capital requirements, and operational constraints—large financial institutions and well-capitalized firms are best positioned to issue MAS-compliant stablecoins.
Smaller non-bank players face disproportionate costs and limited flexibility, making compliance economically challenging. Thus, while the framework enhances safety, it may inadvertently limit market diversity.
Frequently Asked Questions (FAQ)
Q: What is a Single-Currency Stablecoin (SCS)?
A: An SCS is a digital token pegged 1:1 to a single fiat currency—such as USD or SGD—and fully backed by high-quality liquid assets as mandated by MAS.
Q: Do banks need a license to issue stablecoins in Singapore?
A: No. Banks are exempt from obtaining an MPI license because existing banking regulations already enforce equivalent standards for capital, reserves, and governance.
Q: Can stablecoin issuers earn interest on reserves?
A: No. Issuers cannot engage in lending, staking, or yield-generating activities. However, third-party platforms may offer yield products using user-held stablecoins.
Q: Are money market funds allowed in reserves?
A: No. MAS does not classify money market funds as cash equivalents for reserve purposes, unlike some other jurisdictions.
Q: How often must reserve audits be published?
A: Monthly audited reports must be made publicly available on the issuer’s website to ensure ongoing transparency.
Q: Can I redeem my stablecoin instantly?
A: Redemptions must be processed within five business days at face value, though actual processing times may vary depending on the issuer.
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Conclusion
Singapore’s stablecoin regulatory framework marks a pivotal step toward mainstream adoption of digital currencies. By combining rigorous reserve rules, clear licensing pathways, and strong consumer protections, MAS has created a model that balances innovation with financial stability. While challenges remain—particularly around cross-border operations and inclusivity for smaller players—the framework provides a robust foundation for the next generation of trusted digital money.
As Hong Kong, the U.S., and EU finalize their own regulations, global harmonization may follow—with Singapore’s approach serving as a key reference point.
Core Keywords: stablecoin regulation, Monetary Authority of Singapore (MAS), Single-Currency Stablecoin (SCS), reserve requirements, MPI license, digital currency compliance, fintech regulation