Quick Breakdown
- MAS warns that unregulated stablecoins have failed to maintain stability, drawing parallels to the 2008 money-market fund crisis.
- The new stablecoin framework prioritizes strong reserve backing and redemption guarantees.
- MAS’s BLOOM initiative explores the use of CBDCs and tokenized bank money in a unified digital ecosystem.
Singapore moves to rein in unregulated stablecoins
Singapore’s central bank is signaling a looming crackdown on unregulated stablecoins as it works to strengthen the country’s financial ecosystem. Speaking at the Singapore FinTech Festival on Thursday, Monetary Authority of Singapore (MAS) managing director Chia Der Jiun said the regulator is concerned about the “patchy record” of unregulated stablecoins in maintaining their pegs.
“There has been a lot of attention on stablecoins. They are offered as open platforms, able to work across many different applications and use cases,”
Chia said.
“While agility is a strength, stability must be reinforced.”
He likened the frequent depegging of these assets to the money-market fund runs of 2008, warning that such instability makes them unsuitable as settlement assets for large transactions.
New stablecoin framework prioritizes credibility
Chia emphasized that the next phase of digital money must be defined by stability as much as by speed or programmability. He said MAS is finalizing legislation under its stablecoin framework, which was released in August to guide the issuance of single-currency stablecoins.
The upcoming regulatory regime will focus on reserve backing and redemption reliability as key conditions for stablecoins to qualify as “settlement-grade” assets. Only well-capitalized and fully supervised issuers will meet the criteria, Chia noted.
He added that MAS intends to strengthen the framework over time as stablecoins become more integrated into mainstream finance.
“Over time, if some regulated stablecoins become systemic, regulatory frameworks will need to be strengthened further, cross-border regulatory cooperation enhanced, and access to central bank facilities considered,”
he said.
CBDCs and tokenized bank money in focus
Beyond stablecoins, Chia outlined the central bank’s broader digital asset vision, which includes wholesale central bank digital currencies (CBDCs) and tokenized bank liabilities. He highlighted MAS’s BLOOM initiative — short for Borderless, Liquid, Open, Online, Multi-currency — which is testing how these digital settlement instruments can coexist in a tokenized financial system.
“MAS is working with industry partners to explore the use of all three settlement assets,”
Chia said, urging financial institutions and clearing networks to join the ongoing trials.
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