Singaporean financial watchdog to consult public on stablecoin regulation

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The Monetary Authority of Singapore (MAS), a city-state’s chief financial regulator, is assessing the merits of a stablecoin regulatory regime. The current guidelines focus on Know Your Customer (KYC) and Anti-Money Laundering (AML) issues and do not reflect the specific risks to which the stablecoins are entitled.

On Monday, the official MAS portal published a written response from the chief of the regulator, Tharman Shanmugaratnam, to a question from one of Singapore’s MPs. The question asked whether there is data on the extent of Singaporeans’ exposure to the recent collapse in the value of the TerraUSD Classic (USTC) stablecoin and the Luna Classic (LUNC) token, and whether the MAS is actively considering measures to address similar crises. to grab .

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Shanmugaratnam acknowledged that Terra’s collapse illustrates the high risks of crypto investment, but stressed that the turmoil has not significantly affected the mainstream financial system and the economy.

In most of his response, the official revealed MAS’ current plans for stablecoins. He claimed that MAS is actively reviewing its approach to regulating stablecoins, as the existing framework, in which stablecoins, among other cryptocurrencies, are considered digital payment tokens (DPTs), does not cover the specific risks.

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Therefore, MAS assesses “the merits of a regulatory regime” tailored to the specificities of stablecoins. It focuses, among other things, on regulating reserve requirements and the stability of the link. As the response indicates, the MAS plans to consult the public in the coming months about possible guidelines.

Related: Singapore’s financial watchdog is considering further restrictions on crypto

On July 19, Ravi Menon, the director of MAS, publicly rejected associations between TerraForm Labs, Three Arrows Capital (an ongoing bankruptcy proceeding for crypto hedge funds) and crypto regulation in Singapore. In his speech, Menon also emphasized the need to shift the regulatory focus from the KYC/AML to the more nuanced risks of crypto.

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