Singapore’s emerging regulatory approach to stablecoins

• Main Author: PHANG, Rachel
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: Digital currencies; jurisdiction; international finance; regulatory reform; Asian Studies; Banking and Finance Law; Economic Policy
• Online Access: https://ink.library.smu.edu.sg/sol_research/4538; https://ink.library.smu.edu.sg/context/sol_research/article/6496/viewcontent/Stablecoins_av.pdf
• Institution: Singapore Management University

The Monetary Authority of Singapore's vision to develop "an innovative and responsible digital asset ecosystem" has placed stablecoins firmly on the regulatory agenda. Stablecoins, as cryptoassets designed to maintain a stable value, are regarded as having the potential to serve as a tenable medium of exchange for the digital asset ecosystem - so long as they are well-regulated and securely backed. Both this vision of a flourishing digital asset ecosystem, as well as the specter of the instability wrought by the recent algorithmic stablecoin collapse, speak to the need for sound regulation of stablecoins. This article therefore seeks to critically analyze Singapore's emerging regulatory approach to stablecoins and stablecoin-related activities. First, it examines the regulatory concerns implicated by stablecoins. Second, it critically assesses the regulatory (and briefly, the legal) characterizations of stablecoins, focusing on the previous, present and proposed regulatory characterizations under the Payment Services Act 2019; and on potential alternative characterizations under banking and securities laws. Third, it discusses the current and proposed regulation of stablecoin-related activities and stablecoin arrangements, and suggests some further considerations for regulatory reform. This article aims, from a local perspective, to provide a comprehensive account of and venture suggestions for the continuing development of Singapore's regulatory approach to stablecoins; and from an international perspective, to present a case study of the regulatory approach in one jurisdiction, in the hopes of providing some insights for other jurisdictions that are similarly contending with the conundrum of how best to regulate stablecoins.