Singapore Unveils New Regulatory Blueprint for Foreign Stablecoin Issuers

The Monetary Authority of Singapore has proposed a regulatory framework to permit foreign-issued stablecoins within its financial ecosystem. The policy allows for joint issuance between local and foreign entities and provides a pathway for recognizing stablecoins licensed in overseas jurisdictions, contingent upon bilateral regulatory cooperation agreements.

Issuers must adhere to stringent operational requirements, including mandatory trace-freeze-burn protocols for illicit activity, comprehensive wind-down plans, and regular quarterly stress tests. The framework explicitly prohibits the payment of interest to stablecoin holders, distinguishing it from traditional deposit-taking activities.

Financial institutions seeking to issue stablecoins may be required to establish separate, non-bank corporate entities to manage these assets. While this requirement may increase operational costs, the regulatory recognition is intended to enhance institutional trust and facilitate cross-border settlements, trade finance, and corporate cash management. The proposal remains subject to further clarification regarding reserve asset management and identity verification standards.