Singapore to Become First in the World to Regulate Stablecoins

Singapore could become the first country in the world to regulate the circulation of stablecoins, according to CNBC. The global stablecoin market is estimated at around $125 billion. However, they still remain unregulated on a global scale. Stablecoins represent a type of cryptocurrency whose value is pegged to fiat money or other tangible assets to stabilize their exchange rate.

At present, the Monetary Authority of Singapore (MAS) is already proposing key requirements for this type of cryptocurrency:

• Reserves supporting stablecoins must be held in low-risk and highly liquid assets. Their value must always be equal to or exceed the price of the stablecoin in circulation.
• Stablecoin issuers must redeem the nominal value of the digital currency to owners within five business days of receiving a request.
• Issuers must provide users with "adequate information" and include audit results of the reserves.

These rules will apply to stablecoins issued in Singapore that are pegged to the value of the Singapore dollar or any currency of the Group of Ten (G10) countries, such as the US dollar. Stablecoins that meet these requirements will be recognized as "MAS-regulated stablecoins," distinguishing them from other tokens.

Stablecoins like USDT and USDC often serve as the foundation for cryptocurrency trading, allowing traders to deposit and withdraw various digital coins without the need for conversion to fiat currency. Despite stablecoin issuers asserting that these tokens can be used for various purposes, including money transfers, they are often criticized for lack of transparency in reserve matters. Singapore aims to bring more clarity to this field.

Last year, the collapse of the UST stablecoin drew regulators' attention to this type of cryptocurrency. In contrast to USDT and USDC, UST was algorithmically controlled and did not have real assets in its reserves, such as bonds.

In June, the United Kingdom passed a law giving regulators the authority to oversee stable digital coins, although specific rules have not yet been developed. Meanwhile, Hong Kong is conducting public consultations on stablecoins and aims to implement regulations next year.

It is worth noting that the IMF has announced plans to create a global platform for central bank digital currencies, and Deutsche Bank has applied for a license to store cryptocurrencies.