the Monetary Authority of Singapore (MAS) logo is displayed on a smartphone

Monetary Authority of Singapore to publish feedback on digital currency and stablecoin consultation in Q2

The Monetary Authority of Singapore (MAS) has confirmed that it will be publicizing the feedback it received from two consultation papers it published in 2022.

The consultation papers dealt solely with proposals designed to protect investors from the risks connected with dabbling in digital currencies in the wake of several collapses. MAS Chairman Tharman Shanmugaratnam made the revelation to Singapore’s parliament during the week via a letter following a barrage of questioning from the lawmakers.

“MAS received substantial feedback from a wide range of respondents. MAS is currently reviewing the feedback received, and intends to publish our response to the consultation feedback by mid-2023,” Chairman Shanmugaratnam said.

Chairman Shanmugaratnam noted that the central bank’s proposal triggered diverse reactions from the industry as CEOs of virtual asset service providers and academics contributed to the list. The window for receiving feedback closed on December 21, prompting lawmakers to quiz Shanmugaratnam on when a proper disclosure will be made.

Part of the proposals in MAS’ paper was an outright ban on the offer of leverage and credit by virtual currency service providers by retail traders. Internal mechanisms were included to ensure a clear separation of clients’ funds from the firm’s proprietary funds.

Under the proposals, firms would be mandated to “maintain high availability and recoverability of their critical systems” while reducing instances of conflicts of interest to the barest minimum.

“Notwithstanding these regulatory measures, consumers must continue to exercise utmost caution when trading in DPTs and must take responsibility for such trading,” the MAS said. “Regulations cannot protect consumers from losses arising from the inherently speculative and highly risky nature of DPT trading.”

All eyes on stablecoins

Since bearing the brunt of the TerraUSD (UST) collapse, Singaporean regulators are channeling most of their efforts toward robust stablecoin regulation. The country’s banking regulator confirmed that it would be regulating all stablecoins pegged to a single currency in the event that the amount surpasses $3.7 million.

There is the additional requirement that stablecoin issuers ensure that their assets are 100% backed with reserves in cash or its equivalent. The MAS places the additional burden of separating reserves, regular audits, and “timely redemption at par value.”

Banks will be authorized to provide their own stablecoins with separate regulations issued in the event that the stablecoin operates as a tokenized bank liability. It is important to note that all single-currency stablecoins should be pegged to the Singapore dollar or any of the G10 currencies.

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