MAS Consults on Regulatory Approach to Stablecoins: Ripple and Circle Provide Feedback

The Monetary Authority of Singapore (MAS) Seeks Feedback on Stablecoin Regulations

The Monetary Authority of Singapore (MAS) has released an advisory paper to gather industry feedback on its proposed regulatory approach to stablecoins and related activities in Singapore. Stablecoins are cryptocurrencies designed to maintain a stable value by pegging them to real-world assets like fiat currencies.

Ripple and Circle Provide Input on Key Issues

Ripple and Circle, two major cryptocurrency firms, have offered detailed responses to MAS’ consultation. They have shared their views on important matters such as the scope of regulation, requirements for issuing stablecoins, reserve assets, redemption policies, and risk management.

Focusing on Single Coin Stablecoins (SCS)

MAS intends to introduce regulations specifically for “single coin stablecoins” (SCS) issued in Singapore, while volatile cryptocurrencies and algorithmic stablecoins would continue to be governed by existing rules.

Ripple Supports Regulation of SCS

Ripple supports MAS’ initial focus on regulating SCS issued in Singapore. However, it warns that SCS outside of Singapore may still become systemically important in the future. Ripple suggests adopting regulations to address risks while promoting innovation.

Circle Agrees with the Focus on SCS

Circle also agrees that focusing on SCS is appropriate. It highlights that its USDC stablecoin is regulated in the US and strictly pegged 1:1 to cash reserves. However, Circle cautions against restricting the use of Singapore’s main offshore SCS, as it may limit the country’s access to the benefits and liquidity of stablecoins.

Rules for Stablecoin Issuance

Ripple endorses MAS’ proposal for a new regulated activity called “stablecoin issuance service” under the Payment Services Act. Circle also supports the framework for licensing non-bank issuers as payment institutions. However, Circle argues that “token deposits” issued by banks should not be treated the same as “prestige cash” backed entirely by liquid assets like USD.

Agreement on Labeling and Reserve Assets

Both Ripple and Circle agree that a single label should be used for both bank and non-bank issued SCS platforms. Ripple suggests using the term “regulated stablecoin,” while Circle proposes terms that convey “regulated” or “securely backed.” They also caution against requiring all reserves for FX-linked SCS to be held onshore in Singapore and emphasize the importance of consistent global standards through collaboration between regulators.

Refunds, Safeguards, and Systemic Risk

Ripple and Circle generally support MAS’ proposed five business day limit for refunds but call for more clarity on tariffs and transmission requirements for brokers. They also recommend implementing capital buffers and activity restrictions as precautionary safeguards, but with flexibility for legally separate affiliates. Both companies acknowledge the potential for global stablecoins to pose systemic risks in Singapore and support MAS’ willingness to adapt regulations if necessary.

Additional Related Links

For more information, you may also be interested in the following related articles:

• PayPal gets into stablecoins with the launch of PYUSD
• The European Union is concerned about potential banking threats posed by stablecoins