Singapore Central Bank Proposes Stablecoin Rules to Reign in Crypto Sector

The Monetary Authority of Singapore (MAS) has proposed a slew of new rules to reign in the local crypto industry – starting with some stringent standards for stablecoin issuers.

The rules include setting capital and reserve requirements for issuers of stablecoins, which are cryptocurrencies that maintain their value against fiat currencies or assets like gold. The measures also seek to ban issuers from engaging in "other activities that introduce additional risks" like lending or staking that lets users lock their crypto and earn interest.

The rules, which were published on Wednesday, come after a turbulent year for crypto markets. The downturn is particularly frustrating for Singapore regulators, as a number of collapsed multi-billion dollar crypto enterprises like stablecoin issuer Terraform Labs and crypto hedge fund Three Arrows Capital have ties to the country. The MAS had since promised to tighten regulations for the sector.

In two documents, which are open to public consultation, the new stablecoin rules are accompanied by intentions to limit certain retail investors from accessing crypto markets.

"MAS is concerned that retail customers may not have the financial wherewithal to withstand large losses that are likely to ensue from speculative trading of markets that they do not fully understand," a consultation paper on proposed regulatory measures for digital payment token services said.

Read more: Singapore's Central Bank Wants to Foster Digital Assets, Restrict Crypto Speculation