USD
Singapore Proposes Full Stablecoin Reserves and Yield Ban
MAS framework would tighten custody, redemption and issuer requirements
TL;DR
- Singapore’s financial regulator proposed Payment Services Act amendments requiring fully backed stablecoins and prohibiting issuer-paid yield.
- MAS would require segregated reserves, licensed-institution custody, redemption safeguards and operational wind-down planning.
- The consultation also addresses limited recognition of certain foreign stablecoins and closes Oct. 16.
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Singapore’s financial regulator on Sept. 1, 2026, proposed amendments to the Payment Services Act that would require regulated stablecoin issuers to fully back their tokens, separate reserve assets from corporate funds and stop paying yield to holders. The Monetary Authority of Singapore, or MAS, is seeking to formalize standards for the “MAS-regulated stablecoin” designation while keeping stablecoins focused on payments and settlement rather than treating them as public investment or savings products.
MAS would require issuers to maintain reserve assets worth at least 100% of all stablecoins in circulation at all times. Those reserves would have to be held separately from issuers’ own funds and custodied only with licensed financial institutions, establishing both full backing and institutional custody requirements for tokens issued under Singapore’s framework.
The proposal also calls for daily mark-to-market treatment of reserves and mandatory wind-down plans. Redemption protections would require issuers to maintain sufficient reserve assets for holders seeking to redeem Singapore-regulated stablecoins and safeguard funds while redemptions are pending.
MAS said the restrictions are intended to preserve stablecoins primarily as payment instruments. “MAS’s stance remains that while stablecoins may be used for payments, they should not be used by the public as investment products or for the generation of yield, akin to bank deposit,” the bill states.
The proposed rules would consequently prohibit issuers from paying interest or other benefits tied to customers’ stablecoin holdings. MAS said that approach “is aligned with international regulatory practices,” citing the U.S. GENIUS Act and the European Union’s Markets in Crypto-Assets regulation, or MiCA, as frameworks that also prohibit stablecoin issuers from paying interest or yield.
Banks including JPMorgan Chase have lobbied against allowing stablecoins to provide yield, arguing that such products could compete with traditional bank deposits and hurt retail banking businesses.
MAS positions stablecoins as settlement assets
MAS is not proposing to prohibit stablecoins from being used within tokenized financial markets. The regulatory framework instead places tighter boundaries around how Singapore-regulated tokens may function, combining reserve, custody and redemption requirements with restrictions on issuer-paid returns.
“Trusted and well-regulated stablecoins can serve as a credible settlement asset in tokenized financial markets, while mitigating risks to users and the broader financial system,” said Ho Hern Shin, MAS deputy managing director for financial supervision.
Regulated stablecoins are already being tested through Singapore’s financial-technology programs. Ripple is exploring whether its RLUSD stablecoin can replace manual payment processes that have slowed cross-border trade for decades within Singapore’s central-bank sandbox, a controlled environment for testing new financial technology.
The RLUSD testing is part of BLOOM, an MAS initiative intended to extend settlement capabilities involving tokenized bank liabilities and regulated stablecoins.
Stablecoins are cryptocurrencies designed to track the value of an underlying asset, typically the U.S. dollar. Tether’s USDT and Circle Internet Group’s USDC are identified as the two principal stablecoins in the market context surrounding the proposal.
Circle’s CRCL stock had declined 25% over the preceding 12 months to $90.06 per share at the time reflected in the information accompanying the proposal.
Foreign stablecoins and transition rules remain under consultation
MAS is also considering limited recognition for a small number of foreign stablecoins governed by overseas regulatory frameworks that are comparable with Singapore’s standards.
The consultation explicitly leaves several areas to be determined, including how foreign stablecoin recognition would operate in practice, how regulatory responsibilities would be divided for jointly issued tokens and whether transitional arrangements would apply to existing Singapore-based issuers.
The current process follows an earlier MAS consultation on proposed stablecoin rules that began in October 2022. MAS published its response to feedback in August 2023, moving the framework toward the legislative amendments now under consideration.
The current consultation closes on Oct. 16, 2026. MAS plans to consult separately on subsidiary legislation at a later stage, and no implementation date has been provided for the proposed framework.
Taken together, the proposal would require Singapore-regulated stablecoins to be fully backed, held under segregated and licensed custody arrangements, supported by redemption safeguards and wind-down planning, while preventing issuers from turning the tokens into yield-paying products comparable to bank deposits.
This article has been refined and enhanced by ChatGPT.
