Singapore drafts its stablecoin law: full reserves, no interest

The Monetary Authority of Singapore has published draft legislative amendments to implement its stablecoin framework, moving the city state from a policy stance it has held since 2023 to hard statute. The proposals require full segregated reserves, prohibit interest on regulated stablecoins, demand stress testing and wind-down plans of issuers, and, most consequentially for the global market, sketch a recognition path for foreign stablecoins regulated under comparable regimes. Feedback closes on 16 October, and the responses will be read far beyond Singapore, by every issuer weighing where its Asian entity should live.

From framework to law

Singapore was earlier to this than almost anyone. The Payment Services Act brought digital payment tokens under licensing in 2020, and MAS finalised its single-currency stablecoin framework in August 2023, defining an MAS-regulated stablecoin label for tokens pegged to the Singapore dollar or major G10 currencies. What the framework lacked was teeth: it operated as a standard issuers could opt into rather than a law that bound the category. Paxos chose Singapore under exactly this regime to issue USDG, the Global Dollar, in late 2024, betting that the label would eventually carry statutory weight.

This consultation is that weight arriving. The amendments write the framework into legislation, and in doing so they resolve the question every early-mover asked: whether opting into Singapore's standard would eventually mean something enforceable. It will.

What three years of the framework taught

The 2023 framework was a success of design and a lesson in limits. It produced exactly one internationally significant issuance decision, Paxos choosing Singapore for USDG, and a domestic scene, led by StraitsX with its Singapore dollar token, that adopted the standard without the category exploding in size. The lesson MAS drew, visible in this draft, is that voluntary labels sort the willing but cannot bind the market: the tokens Singaporeans actually held remained overwhelmingly offshore dollar assets that never sought the label at all.

Statute changes the default. Once the amendments pass, the MAS-regulated label stops being a marketing credential and becomes the boundary of what may be marketed as a stablecoin in Singapore at all, with everything outside it pushed into clearly labelled, clearly riskier territory. That is the same architectural move Washington made with the GENIUS Act: define the category in law so that the unlicensed thing is legally something else.

The rules, one by one

The reserve requirement is total and structural. Issuers must hold assets equal to at least 100 percent of tokens in circulation at all times, in accounts segregated from the issuer's own funds, custodied only with licensed financial institutions. This is full-reserve banking applied to tokens, with the custody clause ensuring the reserves live inside the supervised system rather than merely being attested to from outside it.

The interest prohibition is the sharpest line, and MAS drew it knowingly. A regulated stablecoin may not pay yield to holders. The logic is the same one Washington wrote into the GENIUS Act: an interest-bearing, fully reserved digital dollar is a bank deposit with better distribution, and no regulator intends to license the disintermediation of its own banking system. Yield in Singapore will belong to deposits and funds, not to payment tokens.

Stress testing and wind-down planning complete the prudential picture. Issuers must demonstrate their reserves survive plausible shocks and must file plans for orderly recovery or dissolution, the requirement that most clearly treats stablecoin issuers as what they economically are: narrow banks whose failure mode is a run.

The two provisions that reach beyond Singapore

The first is joint issuance. Stablecoins issued together by a Singapore entity and a foreign issuer could still qualify for the MAS-regulated label, provided risks are sufficiently mitigated. That is a door for global issuers to co-issue through Singapore rather than beside it, and it acknowledges how dollar tokens are actually structured: multi-entity, multi-jurisdiction, with the brand mattering more than the issuing vehicle.

The second is recognition, and it is the provision the rest of the world should read twice. MAS proposes to recognise a limited number of foreign-issued stablecoins regulated under comparable frameworks, naming MiCA and the GENIUS Act as the benchmarks, primarily for wholesale settlement use. In plain terms: a token licensed in Washington or authorised in Brussels could clear in Singapore without a second full licence, inside defined limits.

That is the seed of passporting, the arrangement the industry has requested since the category began and no major regulator has yet offered. Singapore proposing it matters disproportionately because of what Singapore is: the settlement and treasury hub through which Asian corporate flows route. A recognition regime there makes a GENIUS or MiCA licence worth more everywhere, and pressures other hubs, Hong Kong's ordinance regime above all, to answer with their own.

Hong Kong, and the hub race

The consultation cannot be read outside its rivalry. Hong Kong's stablecoin ordinance took effect in 2025, creating a licensed issuance regime that the territory has promoted hard as Asia's onshore home for the category, and the two hubs are now competing on regulatory product design the way they once competed on listing rules. Singapore's differentiators in this draft are precision and the recognition path; Hong Kong's are mainland adjacency and first-mover licensing. For issuers the emerging playbook is unsentimental: hold a licence in one hub, recognition in the other, and route by corridor. For the hubs, the prize is where the reserves, the jobs and the settlement flow domicile, and neither intends to lose it politely.

There is also a central-bank layer underneath. MAS has spent years on tokenised-money research, from the Ubin settlement experiments to Project Orchid's purpose-bound money trials, and its comfort with private stablecoins is the confidence of a regulator that has already built and tested the alternatives. The draft's calm is earned: Singapore is not guessing what tokenised money does, it has run the pilots.

The convergence, and who it squeezes

Set the three big frameworks side by side and the alignment is unmistakable. Full reserves: all three. Segregation and licensed custody: all three. Interest to holders: prohibited in all three. Licensed issuance with supervisory teeth: all three. Two years ago the global stablecoin map was a patchwork with arbitrage in every seam. The 2026 map is a single regulatory architecture with local accents, and this consultation is Singapore formally joining it.

The squeeze lands on two categories. Offshore issuers serving Asian demand without a licence anywhere now face a hub whose law recognises their licensed competitors and not them. And yield-bearing dollar products, the synthetic and tokenised-fund structures whose entire appeal is the interest that regulated stablecoins cannot pay, are left conspicuously outside the perimeter, legal where unaddressed, unwelcome where defined, and squarely in every regulator's peripheral vision. The same week this consultation opened, a synthetic-dollar neobank launched in 49 countries while avoiding Singapore, the US, the EU and the UK. The map of where such products do not launch is becoming the clearest available drawing of the fence.

Who is positioned where

For Paxos and USDG, the consultation is validation: the early bet on Singapore's label matures into statutory standing just as the Global Dollar Network courts institutional users who need exactly that. For Circle, recognition would let USDC's American licensing carry into Asian settlement without a parallel build. For the bank consortium announced this week, whose token is designed for GENIUS and MiCA compliance, Singapore has just described the third door it can walk through. And for Tether, the pattern repeats a third time this week: another major jurisdiction whose rulebook rewards its rivals' regulatory posture and prices its own.

For Singapore's domestic scene, the interest ban settles a competitive question in advance: local platforms will not differentiate on yield, so they will differentiate on corridors, integration and trust, which is precisely what MAS wants competed on.

What issuers should do before October

The tactical checklist writes itself from the draft. Map every product feature against the interest prohibition, including rewards, rebates and points that a supervisor could recharacterise as yield, because the recharacterisation fight is coming. Re-paper custody so reserves sit with licensed institutions in the required segregation, the clause most existing arrangements fail on technicalities. Model the wind-down plan now: it forces decisions about redemption priority and reserve liquidation order that are cheaper to make outside a crisis. And file a response, even a short one; recognition criteria are being set for a decade, and the regulator has explicitly asked to be argued with until 16 October. The firms that shaped MiCA's technical standards and the GENIUS rulemakings did it in exactly these windows, unglamorously, comment by comment, while competitors waited to read the final text.

The questions the file will fight over

Expect the consultation responses to concentrate on four pressure points. Comparability: whether GENIUS and MiCA recognition is automatic in practice or case-by-case in a way that makes the door ornamental. The wholesale boundary: banks will ask for recognised tokens in more use cases; consumer advocates will ask why foreign tokens deserve any retail surface at all. Joint issuance mechanics: global issuers will push to know exactly how much of the entity, reserves and governance must sit in Singapore for the label to attach. And the treatment of the products just outside the fence, tokenised deposits, money-market tokens, synthetic dollars, where MAS has signalled watchfulness without yet drawing statutory lines, and where every submission from the yield-bearing world will argue for space.

The answers arrive after 16 October. The direction has already arrived: Singapore is writing the category into law, in harmony with Washington and Brussels, and the stablecoin world's regulatory question has quietly changed from whether the rules come to how the rulebooks connect.

The market Singapore is legislating for

It helps to size the stakes. Global dollar stablecoin supply stands near 309 billion dollars, and Asia is where much of it actually works: trading pairs in Seoul and Tokyo, corridor settlement through Singapore itself, treasury balances across Southeast Asian commerce. Singapore's own domestic token scene is small, a Singapore dollar token here, a licensed dollar issuer there, but the flows that route through the city are anything but. The consultation's wholesale-first design reads exactly like a regulator legislating for its actual economy: not a consumer crypto market, but the plumbing junction where Asian corporate money changes form.

That is also why the interest ban will travel further than it first appears. Regional platforms that market yield-bearing dollar balances to Southeast Asian savers routinely run their treasury and settlement through Singapore entities. A statutory prohibition at the junction forces a choice, restructure the yield out, or restructure the Singapore out, and either answer redraws the product map well beyond the city state's borders.

What to watch

Three things before and after 16 October. The consultation responses on recognition, because the definition of comparable, and the wholesale-only limitation, will decide whether this is real passporting or a diplomatic gesture. The treatment of tokenised deposits and yield-adjacent structures in the final text, where MAS has signalled attention but not yet drawn lines. And the first recognised token: whichever foreign stablecoin clears Singaporean settlement first under the new regime will have collected the most valuable stamp in Asian payments.

The calendar from here

Process, briefly, because the dates are the strategy. Feedback closes 16 October. Amendments of this kind typically return to parliament within the following legislative sessions, with commencement staged to give issuers a transition window; existing framework participants, having built to the 2023 standard, begin largely compliant. The practical deadline for anyone wanting to be regulated in Singapore at commencement is therefore now: entity structuring, custody arrangements and reserve mandates take longer than legislatures do. The firms that treat the consultation as the starting gun, rather than the final text as one, will be the ones holding the label when recognition negotiations with Washington and Brussels begin in earnest.

Regulation was supposed to be the risk that stablecoins never survived. Twelve months of statutes, Washington, Brussels, and now Singapore, suggest the opposite ending: the rules arrived, they rhyme, and the market they describe is larger than the one they replaced.