Singapore Stablecoin Framework - Legal Analysis Morgan Lewis provides legal analysis of Singapore's MAS stablecoin regulatory framework, examining compliance requirements, reserve standards, and practical implications for issuers.
August 2023
Source: Morgan Lewis

What Does Morgan Lewis's Analysis Cover?

Morgan Lewis examines the legal and practical implications of Singapore's stablecoin framework for issuers and service providers. The analysis focuses on how the framework translates into actionable compliance requirements and strategic considerations.

How Does the Framework Work?

Regulatory Structure

  • Built on existing Payment Services Act infrastructure
  • Major Payment Institution license required for issuers
  • Specific requirements layered on top of general PSA obligations
  • MAS retains flexibility through guidelines and conditions

Scope Determination

  • Single-currency pegs to SGD or G10 currencies covered
  • Circulation threshold determines regulatory tier
  • Functional assessment of stablecoin characteristics
  • Algorithmic and multi-currency stablecoins excluded from framework

What Is the Licensing Pathway?

Application Process

  • MPI license application to MAS
  • Business plan and operational documentation
  • Fit and proper assessment of directors and shareholders
  • Demonstration of compliance capabilities

Capital Requirements

  • Minimum S$1 million base capital
  • Higher capital based on circulation volume
  • Ongoing capital maintenance obligations
  • Financial reporting to MAS

What Are the Key Compliance Obligations?

Reserve Management

  • 100% reserve backing with eligible assets
  • Cash, government securities, or bank deposits
  • Daily valuation and monthly attestation
  • Independent audit requirements

Operational Requirements

  • Segregation of customer assets
  • Business continuity planning
  • Cybersecurity standards
  • AML/CFT compliance

Consumer Protection

  • Clear disclosure of rights and risks
  • Redemption within 5 business days
  • Transparent fee structures
  • Complaint handling procedures

What Practical Issues Does Morgan Lewis Identify?

Implementation Challenges

  • Reserve asset custody arrangements
  • Attestation provider selection
  • Technology infrastructure for redemption
  • Cross-border operational complexities

Strategic Considerations

  • Currency selection (SGD vs G10)
  • Target market and use cases
  • Partnership vs direct issuance models
  • Integration with existing payment systems

What Should Financial Institutions Consider?

  • MAS framework provides first-mover advantage in regulated stablecoin market
  • Clear rules reduce legal and compliance uncertainty
  • MAS-regulated designation provides competitive differentiation
  • Framework aligns with emerging international standards
  • Singapore's position as financial hub adds strategic value

The Coinbax Perspective

Morgan Lewis's analysis highlights a key advantage of Singapore's approach: building on existing Payment Services Act infrastructure rather than creating entirely new regulatory categories. This provides familiarity for licensed entities and leverages established supervisory relationships.

The practical focus on implementation challenges is valuable. Understanding that reserve custody, attestation, and redemption infrastructure require significant investment helps institutions plan appropriately.

Frequently Asked Questions

Is an MPI license required for all stablecoin activity?

For issuing MAS-regulated stablecoins, yes. Service providers dealing in stablecoins may require different license types depending on their specific activities.

How long does licensing take?

MAS does not specify fixed timelines. Preparation quality and responsiveness to queries significantly affect processing time. Plan for several months from application to approval.