The Monetary Authority of Singapore (MAS) has signaled an impending regulatory shakeout for unregulated stablecoins, as the nation moves to safeguard the integrity of its financial ecosystem.
In a keynote address at the Singapore FinTech Festival on Thursday, MAS Managing Director Chia Der Jiun cautioned that unregulated stablecoins have a patchy record of keeping their peg, adding that such assets are not suitable as safe settlement assets for large wholesale transactions.
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. While agility is a strength, stability needs to be reinforced.
Chia drew parallels between unstable stablecoins and the money-market fund runs of 2008, underscoring that Singapore plans to draw a firm regulatory line between fully compliant, reserve-backed tokens and all other issuers.
Only reserve-backed stablecoins to qualify as settlement assets
Chia said that the next phase of digital money requires not only programmability and efficiency but also credibility and redemption reliability. Without strong reserve backing, he warned, public confidence in digital assets could quickly unravel.
Singapore’s upcoming stablecoin legislation will implement the framework finalized earlier this year, first announced on August 15. The rules prioritize reserve adequacy and redemption assurance, meaning only well-capitalized, fully supervised issuers will qualify for settlement or institutional use.
“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.
CBDC and tokenized bank money pilots expand under BLOOM initiative
Alongside stablecoin reforms, MAS is advancing trials of other digital settlement assets including wholesale central bank digital currency (CBDC) and tokenized bank liabilities under its Borderless, Liquid, Open, Online, Multi-currency (BLOOM) initiative.
MAS is working with industry partners to explore the use of all three settlement assets, inviting financial institutions, clearinghouses, and payment networks to join the pilot programs.
The initiatives aim to build a secure and interoperable framework for Singapore’s evolving tokenized financial ecosystem, balancing innovation with institutional-grade safety and oversight.