The Singapore Monetary Authority (MAS) has published a paper inviting industry input on its planned regulatory framework for stablecoins and related activities within the jurisdiction. Leading crypto companies Ripple and Circle have submitted comprehensive feedback on topics such as the regulatory scope, issuance rules for stablecoins, reserve policies, redemption practices, and systemic risk management.
MAS plans to focus its regulatory framework primarily on stablecoins pegged to a single currency (SCS) that are issued within Singapore while applying existing regulations to volatile cryptocurrencies and algorithmic stablecoins.
Ripple expresses support for MAS’s initial emphasis on regulating SCS issued in Singapore. However, it warns that foreign-issued SCS could become significant and thus should not be ignored. The company advocates for a regulatory strategy that balances risk management with the encouragement of innovation.
Circle concurs that focusing on SCS is the right approach and mentions that its own USDC stablecoin is already regulated in the U.S. and pegged 1:1 to cash reserves. Yet, Circle cautions against restricting major foreign SCS, arguing that it could limit the advantages and liquidity available to Singaporeans.
Regarding the issuance of stablecoins, both Ripple and Circle endorse MAS’s plan to introduce a regulated “Stablecoin Issuance Service” under the Payment Services Act. Ripple favors the idea, and Circle supports the proposed licensing framework for non-banking institutions, although it argues that tokenized deposits from banks should not be treated the same as fully-backed tokenized cash, like its USDC.
Both companies agree on a uniform naming convention for stablecoins, regardless of whether they are issued by banks or non-banks. Ripple proposes the term “regulated stablecoin,” while Circle suggests names that indicate the stablecoins are “regulated” or “securely-backed.”
On the subject of reserve assets, both firms advise against making it mandatory to hold all reserves in Singapore, especially for stablecoins pegged to foreign currencies. Ripple calls for global consistency in regulatory standards, while Circle notes that its USDC reserves are distributed across different jurisdictions to meet diverse regulatory demands.
In terms of redemptions, both companies generally approve of MAS’s proposed five-business-day limit but seek more specific guidance on the roles and responsibilities of intermediaries. Ripple proposes a tiered system that ensures adequate oversight.
Concerning prudential measures, both Ripple and Circle support the idea of capital buffers and limitations on activities but ask for leeway for legally separate subsidiaries. Circle believes that bank-issued tokenized deposits should face more stringent regulations compared to fully-reserved tokenized cash.
Lastly, both Ripple and Circle acknowledge the potential for global SCS to pose systemic risks in Singapore and approve of MAS’s readiness to adjust regulations as necessary. However, Ripple urges MAS to define clear criteria for identifying “systemic” risks, while Circle warns against excessive restrictions that could limit the usefulness of foreign SCS.