Singapore’s MAS Proposes Stricter Stablecoin Rules, Interest Ban
Singapore is increasing its scrutiny around stablecoins as the Monetary Authority of Singapore (MAS) published a consultation on September 1 proposing amendments to the Payment Services Act 2019. The Act states that only licensed issuers would now be allowed to use the label “MAS-regulated stablecoin.” Additionally, they would require to back every token with at least 100% reserves, meet redemption deadlines, and avoid paying holders interest or other rewards tied to balances.
According to MAS, this move was important because stablecoins have become one of crypto’s most used products for trading, transfers and dollar-like settlements. For everyday users, the main purpose of using these tokens is that the stablecoins value remains close to a fixed value. However, this can only work if the issuer can actually redeem the tokens on demand and keep the backing assets safe.
What the MAS Consultation Proposes
As stated above, there is a new issuance license for stablecoins under the Payment Services Act in the consultation paper. A company that wants to use the term “MAS regulated stablecoin” would have to be qualified for that specific license.
The authority further aims to make sure that the reserve assets of the issuers would be equal to or more than the value of the circulating stablecoins, making up the main principle of the 100% reserve requirement.
Moreover, MAS wants to increase the level of protection of consumers. Specifically, it suggests protecting funds of the customers prior to the issuance or redemption of the coins, carrying out stress tests once per quarter, and developing contingency plans by the issuers in the case of any problems. MAS wants the stablecoin companies to prove they could withstand any “runs” of users.
Why the Ban on Interest
One of the clearest proposals is the ban on interest or other holder benefits that are linked to the stablecoin balances. According to MAS, this is meant to keep stablecoins in the category of payment instruments, not investment products. This distinction is important because if users expect returns from simply holding a token, the product starts to look more like a savings product, which brings different risks and expectations.
For issuers, this could reshape the business model. Stablecoin firms usually earn money from the assets sitting behind the token, but MAS is signalling that it wants those returns to be kept within a narrow, supervised framework. The result may be fewer flashy incentives for users, but also less temptation for users to take risks with the reserve assets.
AML Controls, Safety and Systemic Risk Rules
MAS is also adding a more technical layer of control. With the proposal, it would require stablecoin issuers to have the ability to trace, freeze or burn tokens linked to illicit activity. This is designed to address money laundering, terrorism financing and other criminal uses, which remain a concern because stablecoin transactions can move quickly and are usually pseudonymous.
For a normal user, this means regulated stablecoins in Singapore may feel more controlled than the open, borderless versions many crypto traders are used to. But that is exactly the point. MAS wants the tokens to remain usable while still giving regulators and issuers a way to intervene when there is clear abuse.
MAS also wants power to designate some stablecoins as “Designated Systemic Stablecoin” if they become large or deeply connected to Singapore’s payment and financial system. If such a coin falls to meet requirements, MAS has the capacity to restrict or suspend its circulation in the region, which also includes ordering licensed providers to delist it. According to MAS, it will look at factors such as size, use in payments, links to the financial system and how easily users could switch to alternatives.
The new proposal that has been put forward by MAS is favoring firms that have strong reserves, proper compliance systems and follow operational discipline. If any issuers were relying on loose reserve management and yield features, they may struggle to fit in.
However, for the users, this proposal will increase trust within the system and losses will be less likely at the time of market volatility. But the trade-off here is that the rewards will decrease and possibly so will the issuers. MAS is also proposing recognition for a limited number of foreign stablecoins governed by comparable overseas frameworks, focused on cross-border wholesale use, and would let qualifying jointly issued foreign and Singapore tokens carry the regulated designation.
Singapore has invited public comments on the proposal which are open until October 16,2026. MAS set out the framework’s core requirements in 2023, and this consultation would covert that guidance into statute. Paxos Digital Singapore received full approval under the existing framework in 2024, with DBS providing custody.
