On Tuesday, Singapore's financial regulatory body disclosed that it had approved stablecoin legislation, making it one of the world's first to do so. Digital currencies, known as stablecoins, often backed by tangible assets like cash or government bonds, are designed to keep a steady value in relation to a fiat currency.
Two leading firms, Tether's USDT, and Circle's USDC, dominate over 90% of the stablecoin industry, estimated to be worth about $125 billion.
According to the recently created Singapore policies, stablecoin issuers must maintain a minimum base capital of $1 million Singapore dollars ($740,000) and must make redemption requests within five working days, Nikkei Asia reported.
In June, the Singapore branch of stablecoin issuer Circle received a license for digital payment token services from the Monetary Authority of Singapore (MAS), demonstrating the nation's dedication to regulation and advancement in the cryptocurrency industry.
Bolstering Safeguards for Investors
Over the last year, Singapore has gradually tightened its control over the cryptocurrency industry to safeguard investors as more people participate in the risky asset class.
The MAS limited the placement of crypto service advertisements in public places as part of this initiative. According to cryptocurrency payment processor Triple-A, approximately 640,000 individuals in Singapore, or an estimated 11% of the population, invest in cryptocurrencies.
The movement for stricter regulation was aided by the failure of illegal stablecoin businesses like TerraUSD and Luna. Singapore responded by announcing intentions to impose stronger regulations on cryptocurrency businesses, including requirements for client asset protection via trusts and restrictions on lending and "staking" digital payment tokens.
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Despite heightened restrictions, Singapore acknowledges stablecoins' promise as a critical technology for the digital economy. Stablecoin issuers must assure value stability, maintain a portfolio of low-risk reserve assets equal to at least 100% of the outstanding stablecoins in circulation, and follow strict disclosure and audit result criteria per MAS-prescribed laws.
Singapore's Measure Lauded
Tether and Circle, two stablecoin companies, commended Singapore's new crypto guidelines, according to CNBC.
Yam Ki Chan, Vice President of Strategy and Policy for APAC at Circle, remarked that the Monetary Authority of Singapore (MAS) is included in the forward-thinking global regulators in establishing a transparent and comprehensive stablecoin regulatory framework.
Chief Technology Officer of Tether, Paolo Ardoino, said that the framework offers a well-defined structure and a straightforward approach for carrying out stablecoin activities in Singapore while guaranteeing transparency and responsibility.
The passage of a measure by the US House Financial Services Committee last month, intending to build a thorough federal regulatory system, demonstrates that the United States is also pursuing the regulation of these currencies, per Reuters. While Hong Kong and the United Kingdom seek to create stablecoin legal frameworks, Singapore is emerging as a leader in stablecoin regulation.
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