Monetary Authority of Singapore plans public consultation to amend stablecoin regulations

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The Monetary Authority of Singapore (MAS), Singapore’s financial regulator, says it is working on amending the city-state’s digital assets regulations to cover more than Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) and will soon hold public consultations on the matter. 

Senior Minister and Minister in charge of MAS, Tharman Shanmugaratnam, made the announcement in a written response to a parliamentary question raised by MP Saktiandi Supaat of the Bishan-Toa Payoh Group Representation Constituency. 

The questions directed at the Prime Minister bordered on three issues: If the MAS has data on the extent of the exposure of Singaporeans to the Terra ecosystem crash; if the ecosystem’s revival efforts pose any more systemic risk to the economy; and what steps the regulator is taking to review the industry’s regulations. 

Shanmugaratnam stated that the MAS does not have complete details of the digital assets holdings of Singaporeans. However, MAS data shows that banks have insignificant exposure to the Terra ecosystem, suggesting that the spillover risk of the digital assets market crash to the mainstream financial sector is limited. 

He further highlighted that, like other global regulators, the MAS is working on reviewing its approach to digital assets regulations. This review will significantly target stablecoins, he added. 

“MAS is assessing the merits of a regulatory regime tailored to the specific characteristics and risks of stablecoins, such as regulating the reserve requirements and the stability of the peg, and will consult the public in the coming months,” Shanmugaratnam wrote.

The response echoes statements he made last month while answering another parliamentary inquiry on the MAS’s plans to regulate digital assets firms. He noted that the MAS would leverage its recently expanded powers to redefine digital assets and introduce additional consumer protection safeguards. 

Singapore dissociating itself from collapsed digital assets firms 

Spurred by the collapse of Terra and other digital assets firms like Three Arrows Capital (3AC) based in the city-state, Singapore has determined to be unrelentingly hard on the digital assets industry. 

The MAS has cracked down hard on the firms that have brought it bad publicity. According to a Bloomberg report, the MAS has issued a reprimand to 3AC and has several ongoing investigations into the asset manager and Luna Foundation Guard (LFG). 

The MAS has also distanced itself from the firms. In a recent report, Ravi Menon, the managing director of MAS, shared that the firms, especially LFG and 3AC, are not representative of Singapore’s digital assets regulations approach. He revealed that 3AC had already lost its registration with the MAS before its liquidity fallout.

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