MAS Proposes Stablecoin Licensing Regime for Singapore

On 1 September 2026, the Monetary Authority of Singapore opened a consultation that would write its stablecoin framework into primary legislation for the first time, add a dedicated stablecoin issuance licence under the Payment Services Act 2019, and attach criminal penalties to false regulatory claims. The draft reaches well beyond issuers: exchanges, payment firms, and banks all acquire new obligations depending on which tokens they touch and how they offer them to customers. For compliance and finance teams running crypto accounting software across Singapore-connected entities, the window to respond and prepare is short. The consultation closes on 16 October 2026.

From Policy Framework to Statute: What Is Changing

MAS first set out its single-currency stablecoin approach in 2023. Those requirements covered full reserve backing, redemption at par, and issuer disclosures, and they introduced a "MAS-regulated stablecoin" label to help market participants distinguish regulated tokens from unregulated ones. The 2023 framework was not, however, embedded in a legislative instrument. This consultation changes that, moving the rules into primary legislation and layering several new requirements on top.

A new licence category

The draft creates a stablecoin issuance licence sitting alongside the existing money-changing, standard payment institution, and major payment institution licences under the Payment Services Act. Only a holder of that licence could lawfully hold a token out as a "MAS-regulated stablecoin." Doing so without a licence, or falsely representing that a token or an entity is MAS-regulated, would be a criminal offence. The proposed penalties are a fine of up to SGD 250,000, with an additional fine of up to SGD 25,000 for each day or part of a day a continuing offence persists after conviction.

Statutory definitions and scope

The proposal introduces statutory definitions for "stablecoin," "MAS-regulated stablecoin," and "MAS-regulated stablecoin issuer." The definition of "stablecoin" is deliberately broad, tracking the Financial Stability Board's framing: any token whose issuer maintains or purports to maintain its value by reference to a single currency or asset, or a pool or basket of currencies or assets. That scope would capture algorithmic tokens as well as fiat-backed ones. The draft also places stablecoins within the Digital Payment Token category and carves fiat-pegged stablecoins out of the definition of "e-money," resolving a definitional ambiguity that has persisted since the 2019 Payment Services Act consultation.

Issuer Obligations: Reserves, Redemption, and Restrictions

The reserve and redemption obligations codify and extend the 2023 framework. Teams maintaining digital asset accounting software for stablecoin issuers should note each element carefully, because several of them generate new accounting and disclosure requirements that sit above existing financial reporting duties.

Reserve adequacy and composition

Issuers would be required to hold reserves equal to at least 100% of the par value of all stablecoins in circulation at all times. MAS is also considering a minimum proportion of those reserves held in cash or bank deposits, and is seeking views on the appropriate threshold. Where an issuer offers more than one stablecoin, reserves for each must be held separately. Customer funds received before a stablecoin is issued, and funds due for redemption but not yet paid, must be safeguarded to ring-fence them in an insolvency. MAS is additionally consulting on whether issuers should be restricted from using customer money or interest earned on it to materially finance their operations.

Interest prohibition and activity restriction

Issuers would be barred from paying interest, return, or any benefit to holders tied to holding a stablecoin. This is a significant commercial constraint and directly affects how token economics are structured. Issuers would also be prohibited from conducting other regulated activities beyond stablecoin issuance itself, a ring-fencing measure designed to limit contagion risk.

Stress testing and wind-down planning

The draft introduces operational resilience requirements that will affect finance and risk functions directly. Reserve assets and redemption mechanisms would need to be stress tested at least quarterly, with results shared with MAS. MAS would have powers to impose additional liquidity or capital requirements where testing reveals critical vulnerabilities. Recovery and orderly wind-down plans would need to be reviewed and approved at board level at least annually, with financial resources independently verified. Where a licence is revoked, lapses, or is surrendered, MAS could prohibit the exiting issuer from disposing of reserve assets until outstanding redemption requests are satisfied.

AML, CFT, and Technical Compliance Duties

Existing AML and CFT obligations for Digital Payment Token service providers already include customer due diligence, the Travel Rule, and screening. The consultation proposes adding a layer that is explicitly technical in nature: issuers would need the capability to trace, freeze, and burn stablecoins found to be used for illicit activity. This is not simply a policy requirement. It demands that the token's smart contract architecture support these functions and that the issuer has governance processes to deploy them appropriately.

Further measures under consideration

MAS is also assessing measures used in other jurisdictions, including verified identification of every stablecoin holder, restrictions on the use of unhosted wallets, and ongoing monitoring of tokens in circulation. None of these has been confirmed as a proposal at this stage, but their inclusion in the consultation signals the direction of travel. Firms building or auditing crypto bookkeeping software for Singapore-regulated entities should factor these possibilities into longer-term system design.

The parallel AML enforcement environment matters here. AUSTRAC's cancellation sweep shows how quickly licensing gaps become enforcement events, and Singapore's criminal penalty construct for false regulatory claims suggests MAS intends a similarly sharp enforcement posture.

Systemic Designation: The Reach Beyond Regulated Tokens

One of the most consequential parts of the draft is a power for MAS to designate any stablecoin as a Designated Systemic Stablecoin. This power is not limited to MAS-regulated tokens. It could apply to foreign-issued stablecoins, unregulated tokens, and algorithmic stablecoins circulating in Singapore, provided MAS determines that systemic risk or public interest warrants designation.

Designation criteria and consequences

The criteria for designation would turn on a token's size, its interconnectedness with Singapore's payment and financial systems, and its substitutability. Once designated, additional requirements drawing on FSB recommendations for global stablecoins would apply, covering enhanced governance, recovery, and resolution standards. Where a designated systemic stablecoin is non-compliant, MAS could direct Digital Payment Token intermediaries to stop offering it, delist it, and prevent further accumulation. This gives MAS a broad reach over tokens that are already embedded in Singapore's digital asset market, regardless of where they are issued or by whom.

Duties for Exchanges and Banks

Two categories of intermediary face new obligations under the draft, and both have significant compliance and accounting implications.

Exchanges and DPT service providers

Digital Payment Token service providers that offer non-MAS-regulated "stablecoins" to retail customers may be required to provide enhanced disclosure of reserve assets, carry clear risk warnings, and may be barred from marketing such tokens using the term "stablecoin." These retail-facing duties create a classification obligation: every stablecoin on an exchange's trading book needs to be assessed against the MAS-regulated threshold, and the result of that assessment determines which disclosure and marketing regime applies.

For firms whose crypto accounting software processes stablecoin transactions at scale, the classification outcome also affects how those tokens are presented on client-facing reports and regulatory filings. A token that is not MAS-regulated but is marketed to retail clients will require a distinct workflow from one that carries the regulated label.

Banks

Banks wishing to issue a MAS-regulated stablecoin would be required to do so through a separate non-bank entity. This structural requirement is not a minor administrative point. It means that any bank exploring stablecoin issuance must plan for a distinct legal vehicle, with its own governance, licensing application, and reserve management infrastructure. The accounting consolidation questions that follow are material: whether and how to consolidate the non-bank entity, how to treat the reserve assets on the group balance sheet, and how to account for intercompany funding flows between the bank and the issuing entity.

The DBS and Citi tokenized deposit work already underway in Singapore illustrates how Singapore's tokenized deposit infrastructure is already shifting settlement accounting, and banks that have been watching that space will need to run similar analysis for the stablecoin entity structure this consultation proposes.

Multi-Jurisdiction Issuance and Foreign Stablecoin Recognition

The draft allows the same fungible stablecoin to be issued from Singapore and from one or more foreign jurisdictions simultaneously. MAS would also recognise a limited number of well-regulated foreign stablecoins, a shift from its 2023 position which was more restrictive on foreign issuance recognition. This has practical implications for firms that consolidate treasury positions across jurisdictions: the same token issued under two regulatory regimes may carry different classification, reserve, and disclosure requirements in each, and those differences need to flow through to the entity's crypto bookkeeping software and group reporting.

Accounting and Reporting Implications for Firms

The consultation does not directly amend financial reporting standards, but its requirements create new obligations that accounting teams need to map now rather than after the legislation passes.

Reserve asset recognition and segregation

The requirement to hold reserves separately per stablecoin, to ring-fence prefunding and redemption queues, and to restrict the use of interest income each have a direct counterpart in the balance sheet. Under IFRS, the question of whether reserve assets are the issuer's assets or held in trust for token holders will determine their presentation, and that determination should be made before the statutory framework is finalised so that accounting policies are consistent with the legislative intent.

Classification of non-regulated stablecoins

For exchanges and portfolio managers, the new retail-facing regime creates a practical classification task. Every stablecoin held or intermediated needs to be assessed against the MAS-regulated criteria. The output of that assessment determines not only the disclosure and marketing treatment but also the appropriate accounting category in digital asset accounting software, since the risk profile and redemption mechanics of a regulated versus a non-regulated stablecoin differ materially.

Wind-down and contingent liability disclosure

The requirement for board-approved, independently verified wind-down plans will generate disclosures in financial statements, particularly where those plans involve contingent financial resources or committed liquidity facilities. Auditors reviewing stablecoin issuers after this framework passes will need to assess whether wind-down plan assumptions are reflected in going-concern assessments and liquidity disclosures.

What to Do Before 16 October 2026

The consultation period is tight. Firms with material Singapore exposure should treat the next six weeks as a scoping exercise, not a monitoring exercise. Specific steps worth prioritising now include mapping every stablecoin on the firm's books or custody against the proposed MAS-regulated and systemic designation criteria, identifying whether any entity in the group could fall within the issuer definition even if it does not currently hold itself out as an issuer, reviewing smart contract architecture for the trace, freeze, and burn capability that the draft requires, assessing the bank entity-separation requirement if the firm is a bank or a bank subsidiary considering issuance, and engaging legal counsel on whether to submit a response to the consultation, particularly on the reserve composition thresholds, the interest income restriction, and the foreign stablecoin recognition criteria. Detailed rules will follow in subsidiary legislation that MAS will consult on separately, so firms that shape the primary legislation now will have more influence over the implementing rules that follow.

Source: TRM Labs