Singapore’s financial regulator has proposed tougher rules for stablecoin issuers that would require them to hold reserves equal to at least 100% of tokens in circulation and bar them from paying interest or other returns to holders.

Under the proposed framework from the Monetary Authority of Singapore (MAS), reserves would need to be segregated from issuers’ own funds and held with licensed financial institutions. Stablecoins would also have to be redeemable at par value. The changes would be implemented through legislative amendments, with MAS consulting industry participants before finalising the rules, meaning issuers and market players will have an opportunity to shape details such as reserve composition and disclosure requirements before the framework takes effect.

The approach reinforces Singapore’s view of regulated stablecoins primarily as payment instruments rather than investment products, limiting the ability of issuers to compete through yield.

Ms Ho Hern Shin, MAS Deputy Managing Director (Financial Supervision), said:

“MAS’ proposed legislative amendments will give effect to a stablecoin framework that promotes responsible financial innovation. The framework will provide clear regulatory guardrails for stablecoins that meet high standards of value stability and governance. This is important as asset tokenisation gains traction. Trusted and well-regulated stablecoins can serve as a credible settlement asset in tokenised financial markets, while mitigating risks to users and the broader financial system.”

The proposals would apply to stablecoins pegged to the Singapore dollar or G10 currencies, and are intended to bring Singapore’s framework closer to emerging regulatory standards in the United States and European Union. The EU’s Markets in Crypto-Assets (MiCA) regime already imposes reserve and redemption requirements on stablecoin issuers, and the United States has been advancing its own federal stablecoin legislation, making alignment important for issuers operating across jurisdictions. MAS is also proposing a pathway for recognising foreign stablecoins operating under comparable regulatory regimes.

The regulatory push comes amid active stablecoin experimentation in Singapore. Ripple is exploring whether its stablecoin RLUSD can replace the manual payment processes that have slowed cross-border trade for decades within Singapore’s central bank sandbox, a safe, controlled workspace where companies test new financial technology.

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Singapore is effectively drawing a regulatory line between stablecoins used as money and yield-bearing crypto products. The 100% reserve requirement could strengthen confidence in regulated stablecoins, while the yield ban may make the market less attractive for issuers competing on returns. How MAS defines “comparable regulatory regimes” for recognising foreign stablecoins, and which reserve assets qualify, will be key details to watch as the consultation progresses.

The development also comes as banks and financial institutions globally accelerate work on their own stablecoins, increasing pressure on regulators to define what qualifies as a payments instrument versus an investment product. Related regulatory debates are underway elsewhere, including France’s push for tighter MiCA limits on non-euro stablecoin payments and U.S. banks seeking to extend the stablecoin yield ban to third-party entities.