Singapore proposes 100% reserves and a ban on stablecoin yield

Singapore's financial regulator has proposed amendments to the Payment Services Act that would require stablecoin issuers to fully back their tokens with reserves and stop paying yield, CoinDesk reports.

• The Monetary Authority of Singapore's (MAS) proposed rules would require issuers to hold assets equal to at least 100% of tokens in circulation at all times
• Reserves would sit in accounts separate from issuers' own funds, custodied only with licensed financial institutions
• The rules would bar issuers from paying interest or other benefits tied to stablecoin holdings, an approach MAS says is aligned with international practice
• The consultation also considers limited recognition for some foreign stablecoins governed by comparable overseas frameworks
• The consultation closes October 16; MAS has not announced an implementation date and will consult separately on subsidiary legislation
• The full-backing requirement would give holders stronger redemption protection by forcing issuers to keep sufficient reserve assets on hand and safeguard funds pending redemption

MAS frames the restriction as a matter of purpose, not just risk: stablecoins should function as a payments instrument, not an investment product. The yield ban puts Singapore alongside the US GENIUS Act and the EU's MiCA framework, both of which already prohibit stablecoin issuers from paying interest.

Trusted and well-regulated stablecoins can serve as a credible settlement asset in tokenized financial markets, while mitigating risks to users and the broader financial system.

MAS first consulted on stablecoin rules in October 2022 and published its response to feedback in August 2023, so the current draft arrives roughly three years after the regulator last moved on the framework, and years after Singapore built a reputation as one of Asia's more crypto-friendly jurisdictions for licensed exchanges and custodians. Regulated stablecoins are already being tested inside the city-state: Ripple's RLUSD is running inside a MAS sandbox program called BLOOM, which is exploring whether the token can replace manual cross-border trade-finance processes.

How exactly the 100% reserve rule and the yield ban interact with Singapore's push to recognize foreign stablecoins is still unsettled. MAS hasn't said how responsibilities would split for jointly issued tokens, or whether existing local issuers would get any transition period. The regulator has also stopped short of a firm rollout date, leaving issuers to plan around a rulebook that could still shift before it takes legal effect. For now, the message to the industry is unambiguous: full backing, no yield, and no carve-outs for players already operating.

This article is for informational purposes only and does not constitute investment advice.