Today, let’s delve into the recent developments in the realm of cryptocurrencies and stablecoins in Singapore, a nation laying a robust foundation to become a pivotal hub in the global cryptocurrency landscape.
Recently, on August 15th, the Monetary Authority of Singapore (MAS) introduced new regulatory guidelines for stablecoins, which are cryptocurrencies pegged to traditional currencies like the US Dollar or the G10 group of currencies, comprising widely traded currencies worldwide. This move brings about significant changes in how organizations issuing stablecoins operate within the country.
Stablecoins serve as a type of cryptocurrency tied to the value of traditional currencies, with the aim of ensuring stability, transparency, and security for their usage. Specifically, organizations issuing stablecoins are required to adhere to the following requirements:
1. **Value Stability:** Reserves must be managed according to specific regulations to ensure that the value of stablecoins remains relatively stable, enhancing user trust.
2. **Capital and Payment Capability:** Issuing organizations need to maintain a minimum capital and easily convertible assets to mitigate the risk of payment failure, ensuring operational safety.
3. **Redemption at Par:** If someone wishes to exchange stablecoins for traditional currency, the issuing organization must guarantee redemption at the stated value within five working days.
4. **Transparency:** Issuing organizations are expected to provide transparent information about how they maintain value stability of the stablecoin, the rights of coin owners, and the outcomes of asset reserve audits.
These new regulatory guidelines are established to create a favorable environment for the growth of stablecoins, facilitating their role as reliable digital exchange mediums and bridging the world of cryptocurrencies with traditional currencies.
Significantly, the Circle-backed USDC became the first stablecoin to receive permission to operate under Singapore’s new regulatory framework. This underscores USDC’s compliance with necessary checks and adherence to regulations.
In conjunction with the launch of the new stablecoin regulations, Singapore also declared that cryptocurrency is a “trusted asset”. This reflects their endorsement of cryptocurrencies and their aspiration to become a global hub in this domain.
Against this backdrop, in the United States, the House of Representatives is currently debating the enactment of formal laws for stablecoins. The voting on the proposed legislation is anticipated to take place in September.