On Tuesday, Singapore's financial regulator declared the completion of regulations for a virtual currency form known as stablecoin. The regulations state that backing reserves for such coins must be kept in low-risk and highly-liquid assets which remain equal to or more than the value of the stablecoin in circulation. Stablecoins are presently estimated to be worth $125 billion, with two tokens - USDT by Tether and USDC by Circle - representing roughly 90% of the market cap value.
The Monetary Authority of Singapore (MAS) stated on Tuesday that guidelines for a digital currency known as stablecoin have been finalized, making Singapore one of the first jurisdictions to do so. Stablecoin is a digital currency meant to maintain a fixed value relative to a traditional currency. Many maintain that they are supported by a reserve of real assets such as money or government bonds. Stablecoins have an estimated worth of around $125 billion with two tokens - Tether's USDT and Circle's USDC - claiming to comprise around 90% of the market cap. Nevertheless, regulatory oversight for stablecoins is still mostly absent in many locations.
MAS' framework sets out standards including reserves to back the stablecoins have to be in low-risk and highly-liquid assets and must remain equal to or greater than the circulating value of the stablecoin. Additionally, issuers have to return the par value of the digital currency to holders within five business days of a redemption request and make appropriate disclosures to customers, including an audit of the reserves. These regulations are applicable to stablecoins produced in Singapore with the value matching that of the Singapore dollar or any of the G10 currencies, such as the United States dollar.
The Monetary Authority of Singapore (MAS) announced that it will recognize stablecoins which meet its standards as "MAS-regulated stablecoins," distinguishing them from non-regulated tokens. MAS's goal is to make Singapore a major digital currency hub and bolster transparency in the industry. Stablecoins such as USDT and USDC are commonly used for cryptocurrency trading, but they can also be used for other purposes like remittances. Last year, the failure of the algorithmic stablecoin UST called attention to the need for regulation of this type of asset. Singapore is one of the first regions to implement such rules, alongside the U.K., which gave regulators the ability to oversee stablecoins, and Hong Kong, where public consultation on the issue is underway.
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