Crypto
Home›Crypto›Regulation›Singapore proposes 100% reserve backing and yield ban…
Singapore proposes 100% reserve backing and yield ban for stablecoins
Singapore’s Monetary Authority of Singapore would require segregated reserve accounts at least equal to tokens in circulation and would bar issuers from paying interest tied to stablecoin holdings.
Singapore is consulting on new stablecoin rules that would require issuers to fully back tokens with reserves and would prohibit paying yield to holders, the Monetary Authority of Singapore said. The consultation, focused on proposed amendments to the Payment Services Act, is open until Oct. 16, with no implementation date announced.
Under the plan, stablecoin issuers would have to maintain assets equal to at least 100% of stablecoins in circulation at all times, held in accounts separate from the issuer’s own funds. Those reserves would also need to be custodied only with licensed financial institutions, and they are intended to improve protection for holders when redeeming regulated stablecoins.
MAS said the framework is designed to reinforce the idea that stablecoins should be used for payments rather than as investment products or for generating yield. The regulator would also bar issuers from paying interest or other benefits tied to customers’ stablecoin holdings, citing alignment with international regulatory practices.
CoinDesk reports that MAS Deputy Managing Director for Financial Supervision Ho Hern Shin said trusted and well-regulated stablecoins can serve as a credible settlement asset in tokenized financial markets while mitigating risks to users and the broader system. The consultation also includes consideration of limited recognition for some foreign stablecoins.