The Monetary Authority of Singapore (MAS) proposed legislative changes on September 1 that would prohibit interest payments on MAS-regulated stablecoins, introduce stress testing requirements, and open limited pathways for foreign-issued stablecoins to qualify under the city-state framework.
The proposed amendments to the Payment Services Act 2019 would establish how issuers qualify for MAS supervision and which tokens may carry the MAS-regulated stablecoin designation. Only issuers licensed under the Single-Currency Stablecoin framework could describe themselves as licensed MAS-regulated stablecoin issuers. Tokens outside the framework would remain classified as digital payment tokens under Singapore existing consumer protection rules.
MAS Deputy Managing Director for Financial Supervision Ho Hern Shin said the amendments would give effect to a framework promoting responsible financial innovation. Trusted and well-regulated stablecoins could serve as settlement assets in tokenised financial markets, Shin said, while mitigating risks to users and the broader financial system.
The consultation is open for public comment through October 16. The proposals are not yet rules in force but signal the direction MAS intends to take as it finalizes its stablecoin regulatory framework.
The Interest Ban
The proposed prohibition would bar issuers from paying interest or yield on MAS-regulated stablecoins. This is one of several enhancements MAS set out alongside the licensing amendments in its September 1 consultation document.
Restrictions on issuer-paid returns have become a prominent policy question across jurisdictions writing stablecoin rules. A White House economic analysis of stablecoin yield restrictions examined whether such rules would protect traditional bank lending by limiting competition from interest-bearing digital tokens. The debate mirrors similar tensions in the European Union, where MiCA regulations also restrict yield on e-money tokens.
Stablecoins generally seek to maintain a fixed value through reserves, collateral, or redemption mechanisms. Yield-bearing stablecoin designs present different risks from payment tokens backed by cash and liquid assets, as they introduce additional complexity around how returns are generated and distributed to holders.
For Singapore, the interest ban represents a deliberate choice to keep regulated stablecoins focused on payments and settlement rather than competing with bank deposit products. Users seeking yield on their crypto holdings would need to look to lending platforms, staking protocols, or decentralized finance applications outside the MAS-regulated perimeter.
Stronger Issuer Safeguards
Beyond the interest ban, MAS proposed several new requirements for stablecoin issuers seeking the regulated designation. These include stress testing, recovery planning, orderly wind-down arrangements, and protection of customer funds received before stablecoins are issued.
The capital, value stability, redemption at par, and disclosure requirements are also under review. Issuers would need to demonstrate that their reserves can meet redemption demands under adverse market conditions, not just during normal operations. This goes beyond the baseline reserve backing that most stablecoin issuers already provide.
The proposed enhancements build on MAS original 2023 framework, which established requirements covering reserve assets, minimum capital, timely redemption, and disclosures for qualifying issuers. That framework applied to single-currency stablecoins issued domestically and pegged to the Singapore dollar or a Group of 10 currency, including the US dollar, euro, yen, pound sterling, Swiss franc, Canadian dollar, Australian dollar, New Zealand dollar, Norwegian krone, and Swedish krona.
Wind-down planning is a relatively new requirement in stablecoin regulation. It asks issuers to prepare for the scenario where they cease operations, ensuring that holders can still redeem their tokens. This addresses a gap exposed by several 2022 and 2023 failures where users of collapsing protocols faced delays or losses when trying to exit positions.
Foreign Stablecoin Pathways
The new proposals would expand the framework by allowing stablecoins jointly issued by Singaporean and foreign entities to qualify when their risks are sufficiently mitigated. MAS is also considering recognizing a limited number of foreign-issued stablecoins supervised under regulatory frameworks determined to be comparable.
Recognition would stay selective rather than automatic, and would not extend to every stablecoin regulated by an overseas authority. Qualifying foreign-issued stablecoins could support cross-border wholesale transactions, while jointly issued tokens could carry the MAS-regulated label if their operational and regulatory risks meet the authority standards.
The cross-border proposals arrive alongside separate MAS work on tokenised settlement, which the central bank has been testing with industry partners. MAS previously finalized features of the regime covering reserve backing and redemption reliability while preparing draft legislation. Trials of regulated stablecoins and tokenised bank liabilities have been underway.
For the cross-border pathway to matter in practice, MAS would need to recognize specific foreign regulators and their stablecoin frameworks. The consultation asks which jurisdictions qualify, though no final list has been published. The US, EU, and Hong Kong are the most likely candidates given their established stablecoin regulatory regimes.
Industry Context
Singapore move comes as stablecoins emerge as a central battleground in global crypto regulation. The US Senate passed the GENIUS Act in 2025, establishing a federal framework for payment stablecoins. The EU MiCA regime already governs stablecoin issuance across the bloc. Hong Kong launched its own stablecoin licensing regime earlier in 2026.
By proposing an interest ban, Singapore is taking a more conservative stance than some jurisdictions. Interest-bearing stablecoins like MakerDAO DAI savings rate and various yield products on exchanges have attracted billions in deposits by offering returns that traditional savings accounts cannot match. Banning such products under the regulated framework would push yield-seeking users toward unregulated alternatives or offshore issuers.
At the same time, the foreign recognition pathway could give Singapore a competitive edge by making it easier for major international stablecoin issuers to operate within the city-state regulated perimeter. Tether USDT and Circle USDC, the two largest stablecoins by market capitalization, would both potentially qualify if their home jurisdictions are deemed comparable by MAS.
The consultation runs through October 16, after which MAS will consider feedback before finalizing the legislative amendments. The timing suggests final rules could take effect in the first half of 2027.
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