Singapore Proposes Stablecoin License With 100% Reserve Rule
Singapore is moving to formalize its stablecoin regime through proposed amendments to the Payment Services Act.
Summary:
- Stablecoin issuance would become a dedicated regulated payment service.
- Reserves must cover at least 100% of outstanding tokens.
- Holder interest and related incentives would be restricted.
- Only qualifying issuers could use the MAS-regulated label.
The Monetary Authority of Singapore (MAS) wants stablecoin issuance treated as a dedicated regulated payment service, with requirements covering reserves, redemptions, liquidity and financial-crime controls. The proposal builds on the framework MAS finalized in 2023 but introduces a clearer legal boundary around what can be marketed as an “MAS-regulated stablecoin.”
The MAS label would create two stablecoin categories
Not every stablecoin available in Singapore would receive the new designation.
The framework is designed around single-currency stablecoins issued in Singapore and pegged to the Singapore dollar or a G10 currency. Issuers that satisfy the additional requirements could use the MAS-regulated label, while other digital tokens could remain available under separate parts of Singapore’s digital-payment-token regime.
For exchanges, wallets and fintech platforms, that distinction could become commercially important.
A regulated label gives them a simple way to differentiate tokens that meet Singapore’s reserve and redemption standards from stablecoins that do not fall within the framework. It could eventually influence which assets are integrated into payment products or offered to more risk-sensitive customers.
For issuers, the trade-off is equally clear: stronger regulatory recognition comes with restrictions on how reserves are managed and how the token can generate returns for users.
100% reserves do not mean 100% cash
MAS requires eligible reserve assets to equal at least 100% of the par value of stablecoins in circulation.
That does not mean issuers must keep every dollar as cash.
The framework permits highly liquid, low-risk assets, including qualifying short-term government and central-bank debt. Reserves must match the currency of the coin’s peg and be segregated from the issuer’s other assets.
The distinction matters because an issuer can remain fully backed while earning income from the securities inside its reserve portfolio.
A hypothetical issuer with $1 billion of stablecoins outstanding could therefore hold $1 billion of qualifying reserve assets, including interest-bearing government debt. The stablecoin remains fully backed, but the reserve portfolio itself can generate revenue.
MAS couples that requirement with a five-business-day redemption deadline, meaning holders must be able to redeem qualifying tokens at par within the prescribed period.
That is why asset quality matters alongside the headline reserve ratio. An issuer needs enough backing, but it also needs reserves that can be converted into cash when redemptions accelerate.
The no-interest proposal changes who captures the yield
The proposed restriction on paying interest or other benefits linked to stablecoin holdings is one of the more economically significant changes.
Singapore’s earlier framework already restricted issuers from activities such as lending, staking and fund management. The new proposal would draw a clearer line around rewards paid simply for holding the token.
That creates an important asymmetry.
Reserve assets may generate yield even when the stablecoin holder cannot receive yield for holding the token.
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If an issuer backs a dollar stablecoin partly with short-term government securities, interest generated by those assets can become an important source of issuer revenue. Preventing the stablecoin itself from passing a holding-based return to customers preserves a clearer distinction between the token and an interest-bearing financial product.
It could also shape competition.
Issuers operating under the MAS framework would have less room to attract customers through native stablecoin rewards.
Competition would instead move toward transaction costs, redemption reliability, integrations, liquidity and cross-border usefulness.
Users seeking yield would need a separate product or service, carrying its own regulatory and risk characteristics, rather than receiving that return simply because they hold the regulated stablecoin.
Stress tests address a different risk than reserve backing
The proposal also introduces quarterly stress testing.
This should not be treated as another version of the 100% reserve requirement because it addresses a different failure point.
Reserve backing asks:
- Does the issuer have enough assets?
Liquidity stress testing asks:
- Can those assets meet redemptions quickly under difficult conditions?
An issuer could theoretically have assets equal to every token outstanding and still face trouble if those reserves become difficult to sell, settlement systems fail or an unusually large share of holders attempts to exit simultaneously.
MAS’s existing framework also requires minimum capital and liquid assets for operational purposes. Previous rules set base capital at the higher of S$1 million or 50% of annual operating expenses.
Together, these requirements separate three risks that are often grouped under the word “backing”: solvency, liquidity and the issuer’s ability to continue operating.
Freeze and burn powers bring stablecoins closer to regulated payments
The proposed regime would also require issuers to maintain capabilities to trace, freeze or burn tokens connected with illicit activity.
That has consequences for how users should think about regulated stablecoins.
A centrally issued stablecoin is not equivalent to a censorship-resistant asset such as Bitcoin. Its smart contracts can contain administrative controls that allow an issuer to restrict specific addresses or invalidate tokens under defined circumstances.
MAS appears to be treating those controls as part of the compliance architecture.
For regulated payment companies, that makes stablecoins easier to reconcile with sanctions enforcement, fraud investigations and anti-money-laundering requirements.
For users, it also means regulatory approval should not be interpreted as removing issuer control over the asset. In some respects, the opposite is true: compliance can require the issuer to retain intervention capabilities.
Systemic stablecoins could lose regulated distribution
The proposed rules become more consequential if a stablecoin grows large enough to pose broader financial risks.
A systemically important stablecoin that fails to meet regulatory requirements could face restrictions on its distribution, including the possibility that licensed digital-payment-token providers would have to stop supporting it.
That gives MAS leverage beyond imposing a fine on the issuer.
A blockchain token could continue technically operating while losing access to regulated exchanges, brokers or payment providers in Singapore.
For a widely used stablecoin, distribution restrictions could therefore matter almost as much as action against the issuer itself.
What Singapore’s model would mean for issuers
The proposal points toward a fairly specific business model for regulated stablecoins.
An issuer can potentially earn revenue from high-quality reserve assets, but it must keep enough backing to cover every token, maintain liquidity for redemptions and accept limits on using rewards to compete for deposits.
That model favors scale and payments volume.
If native yield cannot be used as the main customer-acquisition tool, larger issuers can instead compete through liquidity, exchange availability, merchant integrations and cheaper transfers. Smaller entrants may find the reserve, capital, compliance and stress-testing requirements more expensive relative to their circulation.
Singapore is therefore not simply deciding whether stablecoins are legal. It is defining the economics of the version it is willing to recognize as regulated digital money.
If the amendments are adopted in their proposed form, the most revealing comparison will be between MAS-regulated tokens and stablecoins operating outside that designation: whether users value the regulatory label enough to choose a non-yielding token when alternatives offer incentives elsewhere.
That will show whether regulatory credibility itself can become a competitive feature in the stablecoin market.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Zdravkov
Reporter at CoinsPress
Alexander Zdravkov is a market analyst and crypto journalist with interests in economics, broader financial markets and digital assets. His journey into crypto began more than four years ago, driven by a fascination with the rapid evolution of blockchain technology and the transformative potential of decentralized finance. He began analyzing market cycles and identifying emerging trends before they reach the mainstream. He holds a degree in International Relations - a background that helped shape his broader perspective on global economics, geopolitics, and the interconnected nature of modern financial markets. Whether covering the latest developments in the crypto sector or exploring broader macroeconomic themes, Alexander focuses on giving readers context rather than simply repeating headlines. During his career, he has authored more than 10,000 articles covering cryptocurrencies, traditional finance, and global market developments. His work spans everything from Bitcoin and altcoins to macroeconomic trends influencing risk assets worldwide.
