The Monetary Authority of Singapore (MAS) has released a consultation paper seeking industry feedback on its proposed regulatory approach for stablecoins and related activities in the city-state.
Major cryptocurrency firms Ripple and Circle submitted detailed responses to the consultation, offering their views on key issues like regulatory scope, stablecoin issuance requirements, reserve assets, redemption policies, and systemic risk management.
MAS aims to introduce regulations focused on “single currency pegged stablecoins” (SCS) issued in Singapore while treating volatile crypto assets and algorithmic stablecoins under existing rules.
Ripple claims it supports MAS’ intent to focus initially on regulating Singapore-issued SCS but cautions that SCS from outside Singapore may still become systemically important over time. It suggests MAS adopt regulations to address risks while still enabling innovation.
Circle agrees that concentrating on SCS is appropriate, noting its own USDC stablecoin is regulated in the US and strictly pegged 1:1 to cash reserves. However, it warns against restricting the use of major offshore SCS in Singapore, as this could limit Singaporean access to their benefits and liquidity.
On stablecoin issuance rules, Ripple endorses MAS’ proposal for a new regulated activity of “Stablecoin Issuance Service” under the Payment Services Act. Circle also supports the licensing framework for non-bank issuers as payment institutions but argues that bank-issued “tokenized deposits” should not be treated equivalently to “tokenized cash” backed fully by liquid assets like Circle’s USDC.
Both firms agree with using a single label for bank and non-bank-issued SCS. Ripple suggests “regulated stablecoin,” while Circle proposes terms indicating “regulated” or “securely-backed.”
For reserve assets, Ripple and Circle caution against requirements to hold all reserves onshore in Singapore, especially for foreign currency-pegged SCS. Ripple urges cooperation between regulators on consistent global standards. Circle notes USDC reserves are held across jurisdictions to meet various regulatory needs.
On redemptions, the firms generally support MAS’ proposed five business day limit but call for more clarity on definitions and transmission requirements for intermediaries. Ripple advocates a tiered system of obligations on issuers and service providers to ensure adequate diligence.
For prudential safeguards, Ripple and Circle back proposed capital buffers and activity restrictions but request flexibility for legally separate affiliates. Circle argues that bank-issued “tokenized deposits” warrant more stringent requirements than fully-reserved “tokenized cash.”
Both agree global SCS could potentially grow large enough to pose systemic risks in Singapore. They support MAS preparedness to adapt regulations if needed. However, Ripple asks MAS to develop clear criteria for labeling arrangements as “systemic.” Circle cautions against overly restrictive standards that could hamper offshore SCS utility.
