Singapore Proposes 100% Reserve Requirement and Yield Ban for Stablecoins
Singapore's Monetary Authority published proposed amendments to its Payment Services Act that would mandate 100% reserves for stablecoin issuers and prohibit yield payments on deposits. The rules also establish pathways for foreign stablecoin issuers and issuer wind-down procedures.
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Reserve and Yield Requirements
The Monetary Authority of Singapore (MAS) proposed amendments to the Payment Services Act 2019 that would require stablecoin issuers to maintain 100% reserve backing at all times. The framework also bans issuers from offering yield or interest payments on stablecoin holdings, aligning Singapore's approach with similar restrictions in the U.S. and EU frameworks.
Foreign Issuers and Wind-Down Procedures
The consultation introduces rules for overseas stablecoin issuers seeking to operate in Singapore, establishing recognition pathways for foreign issuers. The amendments also require issuers to maintain detailed wind-down plans that detail how they would return customer funds and cease operations if needed, adding a new layer of operational oversight.
Regulatory Alignment
MAS stated that the proposed rules align with frameworks adopted by U.S. and EU regulators, positioning Singapore within an emerging international consensus on stablecoin oversight. The amendments codify practices MAS has informally encouraged and formalize the regulatory structure that has guided the city-state's approach to stablecoins over the past two years.
Why It Matters
For Traders
Stablecoin issuers operating in Singapore may see operational costs rise from reserve management and compliance overhead, potentially affecting yield products currently available.
For Investors
The regulatory clarity and 100% reserve requirement reduce counterparty risk for stablecoin users but may compress margins for issuers that previously generated yield from reserve deployment.
For Builders
Projects building stablecoin infrastructure or integrations must adjust product design to comply with yield prohibitions and may need to re-engineer foreign-issuer onboarding flows.
This article is for information only and is not financial advice. Read the full disclaimer.
