Singapore's central bank and financial regulator has proposed a dedicated licensing framework for stablecoin issuers that would require tokens to maintain at least 100% reserve backing and restrict the payment of interest to holders.

According to information published by @WuBlockchain, the Monetary Authority of Singapore (MAS) has proposed amendments to the Payment Services Act that would establish a specific stablecoin issuance license. Only issuers operating under the proposed framework would be permitted to describe their tokens as "MAS-regulated stablecoins." The proposal builds on MAS's earlier public consultation work on stablecoin regulation, which had already flagged reserve backing and redemption discipline as core policy priorities.

MAS Sets Out Reserve and Redemption Requirements

Under the proposed framework, stablecoin issuers would be required to hold reserves equivalent to at least 100% of the value of their outstanding tokens. The requirement is intended to ensure that stablecoins covered by the regime have sufficient backing to meet redemption obligations.

Issuers would also have to meet specified redemption deadlines, obligating providers to ensure holders can convert their stablecoins back into the relevant underlying assets within the required timeframe.

The proposed rules would apply alongside other licensing and regulatory requirements under MAS's Payment Services Act, which serves as Singapore's core framework for payment services. By creating a dedicated category for regulated stablecoins, the regulator aims to establish clearer standards for issuers operating within the country's financial system.

The emphasis on full reserve backing and reliable redemption aligns Singapore with the direction taken in other major jurisdictions, such as the European Union's MiCA regime, which likewise imposes reserve and redemption requirements on stablecoin issuers, and the United States, where federal stablecoin legislation has advanced in Congress.

Stablecoin Holders Would Not Receive Interest

A further significant element of the proposal is a restriction on stablecoin issuers paying interest or providing other benefits linked to token holdings.

The measure would distinguish regulated stablecoins from products designed to generate returns for holders. Issuers would therefore need to structure their offerings around payment and settlement functions rather than direct financial incentives tied to holding the tokens. The restriction also separates regulated stablecoins from interest-bearing token products offered by some crypto platforms, which have drawn regulatory scrutiny in multiple jurisdictions.

For the broader digital-asset industry, Singapore's approach could reinforce a regulatory model centered on reserve quality, redemption reliability, and limits on yield-generating features. The framework may also provide clearer parameters for financial institutions and businesses considering stablecoin-based payments.

The next step will be the consideration of the proposed amendments and the development of the final licensing requirements, including the specific standards issuers must satisfy before using the "MAS-regulated stablecoins" designation. How issuers respond to the no-interest restriction, and whether other regulators adopt similar limits, will be points to monitor as the framework is finalized.

In short, Singapore proposes a stablecoin license requiring 100% reserves, timely redemption, and no interest or other benefits for holders of regulated tokens.

Source: Hokanews