Singapore’s central bank is reviewing whether parts of its stablecoin regime should be opened to certain cross-border arrangements, marking a potential shift from the domestic-only approach it set out in 2023.

The Monetary Authority of Singapore said in a public consultation that it is considering two changes: allowing some jointly issued stablecoins involving a Singapore entity and a foreign issuer to qualify under its framework, and recognizing a limited number of foreign-issued stablecoins regulated under comparable overseas regimes.

MAS launches consultation on updates

The Monetary Authority of Singapore opened the consultation on Tuesday as it works through legislative amendments needed to implement its stablecoin framework. The package also includes additional policy proposals that MAS said reflect developments since 2023.

The review revisits a key boundary in the earlier framework. When MAS finalized its stablecoin rules in 2023, it limited the regime to single-currency stablecoins issued in Singapore and pegged to either the Singapore dollar or a G10 currency.

Possible route for jointly issued tokens

One proposal would create a path for stablecoins jointly issued by a Singapore issuer and a foreign issuer to be brought within the regime. If the relevant risks are considered to be sufficiently mitigated, those tokens could be regulated under the framework and carry the designation of “MAS-regulated stablecoins.”

That would be a notable change from the earlier stance that qualifying stablecoins must be issued solely in Singapore. MAS had previously drawn that line partly because of the added complexity created when issuance spans more than one jurisdiction.

Recognition of some overseas stablecoins under review

MAS is also weighing whether to recognize a limited number of foreign-issued stablecoins that are already regulated under comparable overseas frameworks. The consultation links that possibility in part to their potential role in cross-border wholesale transactions.

The regulator did not indicate a broad opening of the regime. Instead, the proposal is framed as a limited recognition approach for selected foreign-issued tokens, subject to the existence of overseas rules MAS considers comparable.

Why MAS had kept the framework domestic

In 2023, MAS said there were practical and supervisory reasons for keeping the framework focused on domestic issuance. Among the concerns it cited were the difficulty of establishing regulatory equivalence and effective cooperation with other jurisdictions.

MAS also pointed to technical issues in tracing the origin of commingled stablecoins across markets, as well as uncertainty over whether reserve assets held overseas would be sufficient to meet redemption requests. Those concerns remain the backdrop to the new consultation, which proposes movement only where risks can be adequately addressed.

What comes next

For now, the changes are only proposals. The consultation is part of MAS’s process for finalizing legislative amendments and deciding whether the stablecoin framework should be expanded beyond its original domestic scope.

The next confirmed step is the consultation itself, which will inform how MAS implements the framework and whether it ultimately allows a narrow class of cross-border or foreign-regulated stablecoins to be recognized in Singapore.

Source: cointelegraph.com