Singapore’s financial regulator is signalling that many stablecoins without oversight will face stricter treatment.
During a speech at the Singapore FinTech Festival on November 13, Monetary Authority of Singapore (MAS) Managing Director Chia Der Jiun noted that “unregulated stablecoins have a patchy record of keeping their peg”.
Chia pointed out, “There has been a lot of attention on stablecoins. They are offered as open platforms, able to work across many different applications and use cases”.
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He compared stablecoin depegging to withdrawals from money-market funds in 2008. Chia noted that such behaviour makes these tokens “not suitable as safe settlement assets for large wholesale transactions”.
Chia stressed that the next stage of digital money must focus on speed or programmability, as well as on dependable support and clear redemption rights.
He explained that MAS is finalizing legislation for its new stablecoin framework. The key requirements will centre on reserve quality and consistent redemption practices.
Chia stated, “Over time, if some regulated stablecoins become systemic, regulatory frameworks will need to be strengthened further, cross-border regulatory cooperation enhanced, and access to central bank facilities considered”.
He also outlined MAS’s plans for other forms of digital settlement assets, such as wholesale central bank digital currency (CBDC) and tokenized bank liabilities. These ideas are being tested through the Borderless, Liquid, Open, Online, Multicurrency (BLOOM) project.
Recently, the Bank of England warned that loosening its proposed stablecoin rules could weaken the UK’s financial system and potentially restrict lending. How? Read the full story.
