Singapore Moves to Strengthen Stablecoin Regulation Under Proposed Payment Services Act Amendments

Singapore is moving to formalise and strengthen its regulatory framework for stablecoins, with the Monetary Authority of Singapore (MAS) publishing a consultation paper proposing legislative amendments to the Payment Services Act 2019.

The proposed amendments would establish the legislative foundation for MAS’ regulatory framework for single-currency stablecoins and set out the conditions under which stablecoin issuers can become regulated by the central bank and financial regulator. The framework is intended to address one of the defining challenges surrounding stablecoins: ensuring that digital tokens marketed as maintaining a stable value are backed by appropriate safeguards and can deliver on that promise.

At the centre of the proposals is a clearer distinction between stablecoins that meet MAS’ regulatory requirements and other cryptocurrencies that use the term “stablecoin” without being subject to equivalent oversight.

Under the proposed framework, only issuers licensed under the MAS Single-Currency Stablecoin, or MAS-SCS, framework would be permitted to describe themselves as licensed MAS-regulated stablecoin issuers. Their tokens could be represented as “MAS-regulated stablecoins.”

The proposed labelling regime is designed to give users a clearer indication of whether a stablecoin is subject to regulatory requirements aimed specifically at maintaining its value and protecting users.

Stablecoins that do not qualify for MAS regulation would not receive the MAS-SCS designation. Instead, they would be treated as Digital Payment Tokens (DPTs) and would remain subject to the consumer-protection safeguards applicable to DPTs under Singapore’s existing regulatory framework.

A regulatory line between stablecoins and other digital assets

The proposed framework reflects MAS’ effort to address the growing diversity of digital assets while establishing a specific regulatory category for stablecoins whose primary proposition is value stability.

Unlike cryptocurrencies whose prices can fluctuate substantially, stablecoins are generally designed to maintain a relatively stable value against a reference asset, such as a fiat currency. That stability can make them potentially useful for payments, settlement and other financial applications, but it also creates regulatory questions around reserves, redemption rights, disclosures and the ability of an issuer to withstand periods of stress.

MAS’ proposed legislative amendments therefore focus on the mechanisms that underpin the value of a regulated stablecoin.

Among the key requirements under consultation are measures covering value stability, capital, redemption at par and disclosure.

The proposed requirements would establish expectations for how issuers maintain the stability of their stablecoins, the financial resources they must maintain, and how users can redeem their tokens.

The redemption requirement is particularly significant. Under the MAS-SCS framework, regulated stablecoins would be subject to requirements concerning redemption at par, providing users with a defined mechanism for converting their stablecoins back into the relevant reference currency.

Disclosure requirements would provide users and market participants with information necessary to understand the characteristics and risks associated with the stablecoin and its issuer.

MAS considers a broader approach to cross-border stablecoins

The consultation also goes beyond the core legislative amendments and seeks views on several policy issues emerging from the increasingly international nature of the stablecoin market.

One proposal concerns multi-jurisdictional issuance.

MAS is proposing to allow a stablecoin to be jointly issued by a Singapore-based issuer and a foreign issuer and still qualify for regulation under the MAS-SCS framework. Such stablecoins could carry the “MAS-regulated stablecoins” designation, provided that the associated risks are sufficiently mitigated.

The proposal recognises that stablecoin issuance may increasingly involve entities operating across multiple jurisdictions. Rather than limiting the regulatory framework exclusively to domestically structured issuance, MAS is considering how cross-border arrangements could be accommodated while maintaining appropriate safeguards.

The consultation also addresses the recognition of foreign-issued stablecoins.

MAS has identified cross-border wholesale applications as an important consideration and is proposing a mechanism under which a limited number of foreign-issued stablecoins could be recognised if they are regulated under a comparable overseas regulatory framework.

Such recognition would create a potential pathway for selected foreign stablecoins to be used in Singapore’s wholesale financial ecosystem without requiring every foreign issuer to replicate the entire domestic licensing structure.

The proposal, however, would be limited rather than providing blanket recognition for foreign stablecoins.

New safeguards aimed at financial stability

MAS is also proposing additional requirements designed to strengthen the resilience of regulated stablecoin arrangements during periods of financial stress.

Among the measures under consideration is a prohibition on paying interest on MAS-regulated stablecoins.

The proposal is accompanied by requirements for issuers to conduct stress testing, allowing them to assess their ability to withstand adverse scenarios that could place pressure on their reserves, liquidity or operations.

MAS is also proposing that regulated stablecoin issuers maintain recovery and orderly wind-down plans.

The inclusion of these measures reflects a broader regulatory focus on what happens when a stablecoin issuer encounters significant financial or operational difficulties. Rather than concentrating solely on normal-day operations, the proposed framework would require issuers to consider how they would respond to stress and, where necessary, exit the market in an orderly manner.

Such measures could become increasingly relevant as stablecoins develop beyond their role as digital-asset trading instruments and become more closely integrated with payments and financial-market infrastructure.

Consumer protection extends beyond the token itself

The proposed amendments would also introduce additional consumer-protection requirements for stablecoin issuers.

One measure under consideration would require issuers to safeguard customer monies received before stablecoins have been issued.

This would provide an additional layer of protection during the period between a user’s payment to the issuer and the issuance of the corresponding stablecoins.

MAS proposes safeguards broadly similar to those already applicable to existing licensees under the Payment Services Act, extending established principles of customer-money protection into the stablecoin issuance framework.

The measure is part of a wider effort to ensure that users are protected not only through requirements governing the stablecoin itself, but also through controls over the funds and processes surrounding its issuance.

A framework intended to improve market clarity

A central feature of MAS’ approach is therefore differentiation.

The proposed “MAS-regulated stablecoins” designation would give users and market participants a means of distinguishing tokens subject to MAS’ specific stablecoin framework from digital assets that may be described commercially as stablecoins but do not receive the same regulatory treatment.

At the same time, non-MAS-regulated stablecoins would not fall outside Singapore’s regulatory perimeter entirely. They would instead be treated as DPTs and remain subject to the consumer-protection safeguards applicable to those assets.

This creates a two-tier distinction: a specific regulatory framework for qualifying stablecoins that meet MAS’ requirements for value stability and related safeguards, and the existing DPT framework for other digital tokens.

Singapore weighs international developments

The consultation comes as regulators globally continue to develop approaches to stablecoins and their potential role in the financial system.

MAS’ proposals indicate that Singapore is considering not only domestic requirements for stablecoin issuers, but also questions arising from international issuance, cross-border use and regulatory equivalence.

The inclusion of foreign-issued stablecoins and jointly issued tokens in the consultation suggests that interoperability across regulatory regimes is becoming an important consideration as stablecoins develop.

At the same time, the proposed requirements on reserves, redemption, capital, stress testing, disclosures and recovery planning indicate that MAS is seeking to maintain a strong focus on the underlying risks associated with stablecoin issuance.

The consultation therefore represents a further step toward defining how stablecoins can operate within Singapore’s regulated financial and payments ecosystem.

For issuers, the proposals would establish a clearer set of regulatory expectations for obtaining MAS recognition. For users and institutions, the proposed framework could provide greater clarity over which stablecoins are specifically regulated for value stability and which remain subject to the broader DPT regime.

The consultation will now provide stakeholders with an opportunity to respond to the proposed legislative amendments and the additional policy positions outlined by MAS. The feedback will inform the development and implementation of Singapore’s stablecoin regulatory framework.