Singapore is among the first countries in the world to have finalised stablecoin legislation, according to the financial regulator there, who announced the news on Tuesday.
Stablecoins are a particular kind of virtual currency created to maintain a fixed value in relation to fiat money. Many assert to have a reserve of tangible assets, like cash or bonds issued by the government, to support them.
Around $125 billion is the estimated market cap for stablecoins, with USDT and USDC from Tether and Circle, respectively, accounting for around 90% of it.
However, there is little global regulation of stablecoins.
The framework established by the Monetary Authority of Singapore (MAS) outlines many essential requirements:
The assets used to support stabelcoins must be low-risk and highly liquid. They must always be worth at least as much as the stablecoin that is in use.
Within five business days of receiving a redemption request, stablecoin issuers must give holders their digital currency’s par value back.
Additionally, issuers are required to give users “appropriate disclosures,” which include the findings of reserve audits.
These regulations will be applicable to stablecoins that are created in Singapore and are pegged to the Singapore dollar or any other G10 currency, including the US dollar.