Singapore financial regulator has proposed sweeping new rules that would require stablecoin issuers to fully back every token with reserves and bar them from paying interest, marking the latest major jurisdiction to codify strict standards for digital payment instruments.
The Monetary Authority of Singapore published a consultation paper on Tuesday seeking feedback on proposed amendments to the Payment Services Act 2019 that would give legal force to its Single-Currency Stablecoin framework. The proposals would require issuers to maintain segregated reserve assets equal to at least 100% of all tokens in circulation at all times, with reserves held only with licensed financial institutions and kept completely separate from issuers own operating funds.
The consultation closes October 16, though no implementation date has been set. MAS will separately consult on subsidiary legislation at a later stage. The move comes as regulated stablecoins are already being tested in Singapore through central bank sandbox programs, including Ripple exploration of whether its RLUSD stablecoin can replace manual payment processes in cross-border trade.
Yield Ban Aligns With Global Standards
The most significant provision for the broader stablecoin industry is the explicit prohibition on interest or yield payments tied to stablecoin holdings. MAS stated that stablecoins should be used for payments rather than as investment products, drawing a clear regulatory line between payment tokens and yield-bearing instruments.
The stance aligns Singapore with the United States GENIUS Act and the European Union Markets in Crypto-Assets regulation, both of which similarly ban stablecoins from paying interest. The convergence among the three largest regulatory frameworks creates a de facto global standard that major stablecoin issuers like Tether and Circle will need to navigate.
Ho Hern Shin, MAS deputy managing director for financial supervision, framed the proposals as balancing innovation with user protection. Trusted and well-regulated stablecoins can serve as a credible settlement asset in tokenized financial markets, she said, while mitigating risks to users and the broader financial system.
The yield prohibition effectively splits the stablecoin market into two categories: payment tokens that serve as digital cash equivalents, and investment products that must fall under different regulatory regimes. For issuers like Circle, whose USDC has been used in various DeFi yield protocols, the rule would require separating payment functions from yield-generating applications.
Foreign Stablecoin Recognition
The consultation also addresses a potentially far-reaching provision: limited recognition of foreign-issued stablecoins that are governed by comparable overseas regulatory frameworks. Under the proposal, a small number of stablecoins issued outside Singapore could be permitted for use within the jurisdiction, provided they meet standards roughly equivalent to the MAS framework.
This provision could have significant implications for the global stablecoin landscape. If MAS recognizes certain US or EU-regulated stablecoins, it would create a pathway for cross-border interoperability between major stablecoin ecosystems. The consultation also considers how jointly issued stablecoins, those produced by both a Singapore and foreign issuer, would be treated under the framework.
However, several key questions remain unanswered. How the recognition would work in practice, how responsibilities would be divided for jointly issued tokens, and whether transitional arrangements would apply to existing Singapore-based issuers are all left for future consultation rounds.
Capital and Redemption Requirements
Beyond the reserve and yield rules, the MAS proposals include enhanced capital requirements and mandatory redemption protections. Issuers would need to maintain sufficient reserve assets to guarantee that holders can redeem stablecoins at par value at any time. The framework also introduces stress testing requirements, mandating that issuers conduct regular assessments of their reserve adequacy under adverse conditions.
The proposals further require issuers to develop and maintain recovery and orderly wind-down plans, a provision that gained urgency after the Terra/LUNA collapse in 2022 demonstrated the systemic risks of algorithmic stablecoins that could not maintain their peg. While the MAS framework targets fully reserved stablecoins rather than algorithmic designs, the wind-down requirements reflect a broader regulatory appetite for contingency planning.
The prohibition of interest extends to all forms of compensation tied to stablecoin holdings, not just explicit yield. This means promotional rewards, cashback programs, and loyalty point systems linked to stablecoin balances could also fall under the restriction, depending on how MAS defines the scope of the prohibition in subsidiary legislation.
Global Regulatory Convergence Accelerates
Singapore proposals come at a moment of rapid regulatory convergence across major financial centers. The United States GENIUS Act, signed into law in mid-2025, established the first comprehensive federal framework for stablecoins, requiring 1:1 reserve backing and banning yield. The EU MiCA regulation, which took full effect in late 2024, imposed similar requirements across the 27-member bloc.
Hong Kong launched its own stablecoin licensing regime earlier in 2026, and the United Kingdom FCA is set to open its authorization gateway for cryptoasset firms on September 30. Japan and the UAE have also published stablecoin-specific rules, creating a patchwork of overlapping but increasingly harmonized standards.
For the stablecoin market, which now exceeds $200 billion in total circulation, the convergence around 1:1 reserves and yield prohibitions represents a fundamental shift from the largely unregulated era that preceded it. Issuers that can demonstrate full compliance with multiple jurisdictions will have a significant competitive advantage, while those that rely on fractional reserves or yield-based business models face an existential regulatory challenge.
The MAS consultation represents the latest piece of a global puzzle that is rapidly taking shape. As major jurisdictions align on core principles, the remaining questions around cross-border recognition, interoperability, and enforcement coordination will determine whether stablecoins can fulfill their promise as a seamless global payment infrastructure.
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