Deadline for comments is 4 November 2024.

Commenting on the announcement, Assistant Managing Director (Policy, Payments & Financial Crime) at MAS Ms Loo Siew Yee said: “The use of Singpass Face Verification will significantly strengthen the process of digital token set up. This is important as the digital token will be used as a factor to approve subsequent transactions. MAS will continue to work closely with banks on measures to protect customers against scams. We urge consumers to maintain vigilance and avoid falling prey to scams by keeping updated on the latest scam tactics, practising good cyber hygiene and making use of Money Lock.”

The authority also announced the successful completion of the first phase of the Global Layer One (GL1) initiative  and plans to develop standards, market practices and governing principles of foundational digital infrastructure for tokenised assets.

Project Rialto is a collaboration of the BIS Innovation Hub Eurosystem and Singapore Centres in partnership with several central banks. It explores a new automatic FX settlement layer solution using wCBDC as a safe settlement asset that could be deployed for interlinked instant payment systems or digital asset systems.

The amendments will bring the following activities within the scope of regulation under the Payment Services Act:

• provision of custodial services for digital payment tokens;
• facilitation of the transmission of digital payment tokens between accounts and facilitation of the exchange of digital payment tokens, even where the service provider does not come into possession of the moneys or tokens; and
• facilitation of cross-border money transfer between different countries, even where moneys are not accepted or received in Singapore.

The amendments will empower MAS to impose requirements relating to anti-money laundering and countering the financing of terrorism, user protection and financial stability on digital payment token service providers.

Under transitional arrangements, entities currently conducting activities under the Act’s expanded scope must notify MAS within 30 days, and submit a licence application within six months from 4 April 2024, if they wish to continue the activities on a temporary basis while MAS reviews their licence applications.

The licence application must be accompanied by an attestation report of the entity’s business activities and compliance with anti-money laundering and countering the financing of terrorism requirements, duly completed by a qualified external auditor, within nine months from 4 April 2024.

Under MAS’ Project Guardian, MAS collaborated with 15 financial institutions to carry out industry pilots on asset tokenisation in fixed income, foreign exchange, and asset management products. These pilots demonstrated the potential to "reap significant market and transaction efficiencies from the use of tokenisation". 

MAS said that as the pilots grow in scale, there is a need for "closer cross-border collaboration among policymakers and regulators." The regulator has therefore established a Project Guardian policymaker group comprising the FSA, FCA and FINMA . 

The policymaker group will aim to:

a) advance discussions on legal, policy and accounting treatment of digital assets;

b) identify potential risks and possible gaps in existing policies and legislation relevant to tokenised solutions;

c) explore the development of common standards for the design of digital asset networks and market best practices across various jurisdictions;

d) promote high standards of interoperability to support cross-border digital assets development;

e) facilitate industry pilots for digital assets through regulatory sandboxes, where applicable; and

f) promote knowledge sharing among regulators and industry. 

Leong Sing Chiong, Deputy Managing Director (Markets and Development) at MAS, said the partnership "shows a strong desire among policymakers to deepen our understanding of the opportunities and risks arising from digital asset innovation. Through this partnership, we hope to promote the development of common standards and regulatory frameworks that can better support cross border interoperability, as well as sustainable growth of the digital asset ecosystem.” 

The stablecoin regulatory framework will apply to single-currency stablecoins (SCS) pegged to the Singapore Dollar or any G10 currency, that are issued in Singapore. Issuers of such SCS will have to fulfill key requirements relating to:

• 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 fulfill all requirements under the framework can apply to MAS for their stablecoins to be recognised and labelled as 'MAS-regulated stablecoins'.

Any person that misrepresents a token as an 'MAS-regulated stablecoin', may be subject to penalties under MAS’ stablecoin regulatory framework, and placed on MAS’ Investor Alert List.

Ms Ho Hern Shin, Deputy Managing Director (Financial Supervision) at MAS, said, “MAS’ stablecoin regulatory framework aims to facilitate the use of stablecoins as a credible digital medium of exchange, and as a bridge between the fiat and digital asset ecosystems. We encourage SCS issuers who would like their stablecoins recognised as 'MAS regulated stablecoins' to make early preparations for compliance.”