CUBE RegNews:
15^th August

MAS announces new stablecoin regulatory framework   

The Monetary Authority of Singapore (MAS) has finalised its new regulatory framework for stablecoins issued in Singapore. The framework aims to ensure a high degree of value stability for stablecoins, making them a more trusted medium of exchange and a bridge between the fiat and digital asset ecosystems. 

The framework will apply to single-currency stablecoins (SCS) that are pegged to the Singapore Dollar or any G10 currency. Issuers of such SCS will have to meet key requirements, including: 

• Value stability: SCS reserve assets will be subject to requirements relating to their composition, valuation, custody and audit, to give a high degree of assurance of value stability. 
• Capital: Issuers must maintain minimum base capital and liquid assets to reduce the risk of insolvency and enable an orderly wind-down of business if necessary. 
• Redemption at Par: Issuers must return the par value of SCS to holders within five business days from a redemption request. 
• Disclosure: Issuers must provide appropriate disclosures to users, including information on the SCS’ value stabilising mechanism, rights of SCS holders, as well as the audit results of reserve assets. 

Only stablecoin issuers that meet all requirements under the framework can apply to MAS for their stablecoins to be recognised and labelled as “MAS-regulated stablecoins.” This label will enable users to readily distinguish MAS-regulated stablecoins from other digital payment tokens, including “stablecoins” which are not subject to MAS’ stablecoin regulatory framework. 

The new framework is a significant step forward for the regulation of stablecoins in Singapore. It provides a clear set of requirements for stablecoin issuers, and it will help to ensure that stablecoins are used in a safe and responsible manner.  

The new framework is also expected to promote innovation in the stablecoin space. By providing a clear regulatory framework, MAS is encouraging the development of new and innovative stablecoin products and services. This could lead to the wider adoption of stablecoins, which could in turn have a positive impact on the development of the digital economy. 

BaFin publishes high-risk country update 

German regulator Federal Financial Supervisory Authority (BaFin) has issued Circular 07/2023 (GW) which updates its list of countries with deficient AML and CTF regimes. 

The circular also outlines the measures regulated firms need to take regarding those countries identified as having inadequate AML and CTF. Particular requirements are outlined for Iran and North Korea but also notes particularly enhanced due diligence is required in business transactions with Afghanistan, Barbados, Burkina Faso, DR Congo, Gibraltar, Haiti, Jamaica, Yemen, Jordan, Cayman Islands, Mali, Mozambique, Myanmar, Nigeria, Panama, Philippines, Senegal, South Africa, South Sudan, Syria, Tanzania, Trinidad and Tobago, Uganda, United Arab Emirates and Vanuatu. 

European Commission publishes Better Regulation Toolbox  

At the end of July, the European Commission published its Better Regulation Toolbox, a comprehensive document aimed at providing specific and operational guidance on the practical application of the guidelines and additional advice for applying better regulation in practice. Chapters include the following.  

• Chapter 1 – General principles of ‘better regulation’  
• Chapter 2 – How to carry out an impact assessment  
• Chapter 3 – Identifying impacts in evaluations, fitness checks and impact assessments 
• Chapter 4 – Compliance, implementation and preparing proposals 
• Chapter 5 – Monitoring the application of interventions 
• Chapter 6 – How to carry out an evaluation and fitness check 
• Chapter 7 – Stakeholder consultation 
• Chapter 8 – Methodologies for analysing impacts in impact assessments, evaluations and fitness checks