Singapore’s Bold Stablecoin Framework: 100% Reserves Mandate, Zero Interest for Holders

In a landmark move for digital asset regulation, Singapore's Monetary Authority unveiled its proposed stablecoin licensing regime today, mandating full 100% reserve backing for all issuers—a stringent requirement that outpaces global standards—while explicitly prohibiting the payment of interest to token holders. The framework, designed to fortify confidence in fiat-referenced digital currencies, requires firms to maintain reserves in cash or highly liquid government securities equal to the total value of their outstanding coins. However, the regulator's firm stance against interest payments signals a conservative approach, potentially dampening yield-seeking investor enthusiasm in the city-state's bid to become a premier blockchain hub.

The Monetary Authority of Singapore (MAS) has opened a public consultation on September 1 on the legislative amendments needed to implement its stablecoin regulatory framework, moving a framework first finalised in August 2023 closer to actual implementation through amendments to the Payment Services Act. Feedback is open until October 16.

The framework covers single-currency stablecoins issued in Singapore and pegged to the Singapore dollar or a Group of Ten currency. Under the proposal, issuers seeking the protected "MAS-regulated stablecoin" designation would need to maintain reserve assets valued at no less than 100% of outstanding tokens at all times, marked to market daily, held in segregated accounts on trust separate from the issuer's own assets, and custodied only with licensed financial institutions in Singapore or comparable overseas regimes. Reserve assets must be liquid and carry low credit and market risk. Holders would be entitled to redeem at par within five business days.

MAS is also proposing to ban issuers from paying interest or other benefits calculated by reference to a customer's stablecoin holdings, a restriction similar to the interest ban in the US GENIUS Act. Additional safeguards under consideration include mandatory stress testing, recovery and orderly wind-down plans for regulated issuers, and protections for customer funds received before stablecoins are actually issued. MAS said it is also considering limited recognition for a small number of foreign stablecoins governed by comparable overseas regulatory frameworks, though how that foreign recognition would work in practice, along with how responsibilities would be divided for jointly issued tokens and whether transitional arrangements would apply to existing Singapore-based issuers, remains undecided pending the consultation.

"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," said Ho Hern Shin, MAS's deputy managing director for financial supervision.

MAS was careful to note that the regulated designation is meant to give users a clear regulatory marker, not a guarantee: it does not mean MAS backs a licensed stablecoin, eliminates redemption risk, or provides deposit insurance.

The consultation lands as regulated stablecoins are already being tested in live payment and settlement projects tied to Singapore. On August 25, Visa joined BLOOM, an MAS-led initiative connecting traditional payment systems with regulated stablecoin rails, naming cross-border payments firm Nium as its first partner to pilot settlement in stablecoins backed by the US dollar and euro. Visa is one of more than a dozen banks, payment providers and stablecoin issuers participating in BLOOM alongside J.P. Morgan, DBS, OCBC, Standard Chartered and Circle. Formalising the licensing regime that would let issuers legally use the "MAS-regulated" label domestically is a parallel, and arguably prerequisite, track to that kind of institutional pilot activity gaining real scale.