Singapore Finalizes Regulatory Framework For Stablecoins

Hong Kong and Singapore Vie For Regional Crypto Hub Status

By: Samuel Haig Loading...

Singapore Finalizes Regulatory Framework For Stablecoins

Singapore has finalized its regulatory apparatus for local stablecoin issuers amid a bid to preserve its position as a regional hub for digital assets.

On Aug. 15, the Monetary Authority of Singapore (MAS), the city-state’s central bank, published its regulatory guidelines for domestically issued stablecoins, incorporating feedback received through public consultation in October 2022.

MAS said stablecoins issued in Singapore must track a single currency in the form of the Singaporean Dollar or a G10 fiat currency. The G10 nations are Belgium, Canada, France, Germany,Italy, Japan, Sweden, the Netherlands, the United Kingdom, and the United States, with Switzerland also playing a minor role in the organization.

“MAS’ stablecoin regulatory framework aims to facilitate the use of stablecoins as a credible digital medium of exchange, and as a bridge between the fiat and digital asset ecosystems,” said Ho Hern Shin, deputy managing director of financial supervision at MAS.

Singaporean stablecoin issuers must process token redemptions at par value, provide risk disclosures to consumers including detailing their underlying peg mechanism, and demonstrate that they possess the capital and liquid assets required to allow an orderly wind-down of the business if necessary.

The central bank added that the principal objective of its regulations is ensuring that locally-issued stable tokens maintain their peg and serve as a “trusted medium of exchange.”

Entities found to be falsely representing stablecoins as regulated by the MAS will also face penalties.

Hong Kong Embraces Web3

Singapore’s updated stablecoin guidelines come as the city-state is looking to protect its status as a regional hub for virtual assets amid rising competition from Hong Kong.

Hong Kong first unveiled plans to regulate and promote its digital asset industry in October 2022, with officials stating the policies would position Hong Kong as a regional web3 hub. Officials named stablecoins, tokenized assets, smart contracts, and NFTs as areas of interest.

The government then introduced Hong Kong’s first regulatory framework for virtual asset service providers (VASPs) servicing retail investors in June. The rules introduced licensing requirements for exchanges, stablecoin issuers, and other VASPs, quickly giving rise to new players in the crypto industry.

Laws previously introduced in 2018 restricted Hong Kong’s retail traders from accessing the crypto markets, exclusively allowing institutional or professional investors to participate in the sector.

Hong Kong is now determined to bolster its presence as a regional hub for digital assets, with chief executive John Lee Ka-chiu saying that web3 marks a new era for online development in an Aug. 15 speech.

Titled “Web3 Return: Building a Golden New Start,” according to a Google translation, the speech reaffirmed Hong Kong’s commitment to fostering its local virtual asset industry.

“Web 3.0 is a brand-new development direction of the Internet, which integrates technologies that have attracted wide attention in recent years, and has the potential to become a trend that promotes the future development of finance and commerce,” Ka-chiu said.