On September 1, the Monetary Authority of Singapore (MAS) published a consultation paper proposing amendments to the Payment Services Act to formally enshrine stablecoin regulations into law. The core focuses: a dedicated stablecoin issuance license, a minimum 100% reserve, 1:1 redemption, and a ban on paying interest.

ImageUnder the proposal, only MAS-licensed entities will be permitted to use the label “MAS-regulated stablecoin,” distinguishing them from stablecoins subject only to the current Digital Payment Token framework. Licensing conditions include maintaining reserve assets equal to or greater than 100% of circulating stablecoins, ensuring 1:1 redemption within MAS-specified timelines, safeguarding customer funds, complying with anti-money laundering and countering the financing of terrorism (AML/CFT) rules, and having the capability to trace, freeze, or burn tokens when detected to be serving illicit activities.

The most notable point is that MAS intends for stablecoins to serve solely as a means of payment rather than an investment vehicle, thus prohibiting issuers from paying interest or accepting savings deposits on stablecoins. If an issuer fails to meet requirements, MAS can restrict or suspend its circulation in Singapore; for overseas-issued stablecoins, MAS can require licensed service providers to delist them and prevent customers from accumulating more.

For large-scale stablecoins such as USDT and USDC, MAS proposes stricter oversight. If a stablecoin is assessed as capable of impacting Singapore’s financial system, it will be classified as a Designated Systemic Stablecoin and subject to a dedicated regulatory framework based on circulation volume, degree of use in payments, and market significance. Singapore also leaves open the possibility of recognizing foreign stablecoins as “MAS-regulated” if they meet equivalent standards and have cooperative supervisory arrangements in place.

Broader context: this is the next step in Singapore’s ongoing refinement of its crypto regulatory framework, moving toward tightening standards rather than restricting digital assets. This trend is also playing out across several jurisdictions: the U.S. is expediting the implementation of the GENIUS Act with the goal of finalizing guideline frameworks before November 2026; Bolivia, Kazakhstan, and the UK have all made moves related to stablecoins.

The biggest question surrounding yield-bearing stablecoins such as USDE, USDY, or USDS is no longer merely “are they legal?”, but how regulation will reconcile payment functionality with the promise of yields. Singapore’s “no interest” rule, if adopted, will send a clear signal to the entire industry.