The Monetary Authority of Singapore has proposed a dedicated stablecoin issuance license under the Payment Services Act. The requirements are full reserve backing, defined redemption deadline
The Monetary Authority of Singapore has proposed a dedicated stablecoin issuance license under the Payment Services Act.
The requirements are full reserve backing, defined redemption deadlines, and no interest paid to holders.
The provision that matters most is scope. The proposal would extend oversight to foreign issuers, not only domestic ones.
Under the framework, only licensed issuers could issue stablecoins within Singapore’s perimeter.
Reserves must back issued tokens at 100%, which removes the fractional structures that produced most stablecoin failures.
Redemption deadlines mean holders can convert back to fiat within a defined window rather than at the issuer’s convenience. That is the provision that tends to matter during a stress event.
The interest prohibition is the most consequential and least discussed. Issuers could not pay yield to holders.
A stablecoin paying yield is a deposit competitor. One that cannot is a payment instrument.
That distinction determines whether stablecoins pull funding out of the banking system. A token offering 4% while a savings account offers less will attract balances, and those balances stop being available for bank lending.
The US GENIUS Act framework took a comparable position, and the concern drove 39 state bankers associations to form the BankChain Alliance in August to defend deposits with tokenized alternatives of their own.
Singapore is choosing the same side of that argument in advance rather than after deposits move.
It also constrains a business model. Issuers earn on reserves regardless; the ban stops them sharing that with users to buy market share.
Extending a license regime to foreign issuers is the harder part to enforce and the more significant part of the proposal.
Most major stablecoins are issued outside Singapore. A rule that only licensed issuers may operate in the market means those issuers either seek Singapore authorization or lose access.
That is the same structure the EU used with MiCA, which forced much of the industry into a licensing scramble. Optimisus covered how that resolved in the piece on the deadline forcing firms out of Europe.
Enforcement against a foreign issuer usually runs through domestic intermediaries rather than the issuer itself. Exchanges, payment firms and banks become the point of control.
This lands inside a broad international convergence.
G20 finance chiefs met in North Carolina and issued a statement on September 1, delivered through US Treasury Secretary Scott Bessent, recognizing digital assets as engines for economic growth and cross-border settlement. The group endorsed domestic frameworks including the GENIUS Act and MiCA, coordinated through Financial Stability Board standards.
Several jurisdictions moved in parallel through August and September. Vietnam’s penalty rules commenced September 1. Pakistan set a September 5 licensing deadline, covered in that piece.
The common architecture is licensing plus reserve requirements plus redemption rights. Very few jurisdictions are now attempting outright prohibition.
For issuers, Singapore becomes a jurisdiction requiring a specific authorization rather than one reachable through general payment licensing.
For users, a licensed stablecoin in Singapore would carry full backing and enforceable redemption, which is a meaningfully stronger position than most stablecoin holders have today.
For anyone earning yield on stablecoin balances through a Singapore-facing service, the proposal points at that model closing. Yield would have to come from a separate, separately regulated product rather than from the token itself.
Reserve and redemption rules do not remove market risk, as our explainer on token supply mechanics sets out for the wider asset class.
This is a consultation rather than a rule. The scope, thresholds and transition arrangements can all change before anything commences, and the treatment of foreign issuers is the provision most likely to attract industry pushback.
This is not financial advice.
Optimisus covers crypto and technology news for readers who want the detail behind the headline.
