MAS on Track to Consult the Public on Stablecoin Regulations – Minister

As one of the most forward-thinking regulators in the world, the Monetary Authority of Singapore (MAS) is on track to consult with the public regarding the regulations of stablecoins in the country. 

This revelation was made by Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS, who was grilled by lawmakers on the state of crypto and its spillover to the broader financial ecosystem in the country.

In response to the question posed by the lawmaker, seeking to know the extent of Singaporean’s exposure to the collapsed TerraUSD (UST) algorithmic stablecoin and LUNA, Tharman said there is little data on the number of citizens that had exposure to the coins, but reiterated that the exposures to banks are largely insignificant.

“The recent chain of high profile failures in the cryptocurrency markets, starting from the collapse of the TerraUSD (UST) and Luna tokens, illustrates the high risks involved in investments in cryptocurrencies that MAS has warned the public about repeatedly,” Tharman’s response reads, adding that “Despite this turmoil, spillovers to the mainstream financial system and the economy remain limited at this point. While data on cryptocurrency holdings among the Singapore public are not available, statistics collected by MAS show that banks in Singapore have insignificant exposures to the cryptocurrency ecosystem.”

MAS and the Plans for Stablecoins

The lawmakers also sought to know the plans the MAS has for stablecoins in the near future with respect to regulations. In response, Tharman pointed out that at the moment, stablecoins and cryptocurrencies like Bitcoin are classified as Digital Payment Tokens (DPTs) and the only regulatory demand on issuers is to ensure apt Know-Your-Customer (KYC) procedures.

He said the move to regulate the digital assets is a push that the MAS is making, and is billed to make consultations with relevant stakeholders in the near future.

“The regulatory regime for DPT services under the Act primarily targets money laundering/terrorism financing and technology risks. Hence, services relating to DPTs that pose such risks, including dealing and facilitation of exchange, are subject to regulation. 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,” he added.

Earlier, the MAS said that many of the troubled crypto firms including Three Arrows Capital (3AC), Terraform Labs, and the Vauld Group are not necessarily approved to operate in Singapore as the media typically make it seem.