RESEARCH: Singapore Stablecoin Regulatory Framework Update

Executive Summary

• Crypto is legal in Singapore, and the Monetary Authority of Singapore (MAS) actively regulates digital payment token services under the Payment Services Act 2019 (PSA), with a specific focus on stablecoins through the MAS Stablecoin Regulatory Framework introduced in August 2023. MAS
• The MAS is the sole regulator for payment services, including crypto and stablecoin activities, and it has issued licenses to multiple Digital Payment Token (DPT) service providers, including major exchanges like Coinbase and Circle. MAS Licensing
• Under the Stablecoin Regulatory Framework, MAS introduced a "MAS-regulated stablecoin" designation — issuers meeting all conditions can label their stablecoins as such, with the framework effective from August 15, 2023, and additional requirements phased in through 2024. MAS Stablecoin Framework
• The practical reality: no stablecoin issuer has yet received the "MAS-regulated stablecoin" designation, although MAS licensees like StraitsX (XSGD) and Circle (USDC) are actively preparing to meet the conditions for this designation. MAS News
• Singapore is an active FATF member and was assessed as "largely compliant" in its 2024 follow-up report on AML/CFT measures, with the stablecoin framework designed to align with FATF's Recommendations 15 (new technologies) and 16 (wire transfers). FATF Singapore

Regulatory Framework

• The Monetary Authority of Singapore (MAS), at mas.gov.sg, is the central bank and integrated financial regulator responsible for all crypto and stablecoin regulation under the Payment Services Act 2019 (Act No. 2 of 2019), specifically through the Payment Services Regulations 2019 and the Payment Services (Amendment) Regulations 2024. MAS
• The primary law governing crypto is the Payment Services Act 2019, which took effect on January 28, 2020, and was subsequently amended — the major amendment on Digital Payment Token services took effect on April 4, 2024, expanding the DPT license scope to include cross-border money transfer, custodial services, and intermediary activities. MAS PSA Amendment
• The MAS Stablecoin Regulatory Framework was published on August 15, 2023, as an information paper (Pre-consultation Monograph) titled "MAS Stablecoin Regulatory Framework: Proposed Stablecoin Features and Safeguards," later refined through consultation and finalized to include conditions: single-currency stablecoins pegged to SGD or G10 currencies, minimum reserve assets, and full backing requirements. MAS Stablecoin Framework
• The framework requires stablecoin issuers to meet: (1) value stability through minimum base currency (SGD or G10), (2) minimum base currency reserves of 100%, (3) on-chain redemption at par within 5 business days, (4) disclosure of reserve asset details and audit reports, and (5) compliance with MAS' capital and liquidity requirements. MAS Stablecoin Framework
• The framework also introduced the term "MAS-regulated stablecoin" as a proprietary label, and MAS publicly clarified on January 19, 2024, that non-compliant stablecoin issuers may not use the term "MAS-regulated stablecoin" and are subject to action under the Financial Services and Markets Act 2022 (Act 18 of 2022). MAS FSMA
• Singapore is a member of the Financial Action Task Force (FATF) and received its most recent Mutual Evaluation in 2016, with a follow-up report in September 2024. The FATF assessed Singapore as "compliant" or "largely compliant" with 33 of 40 Recommendations, including on virtual assets. FATF Singapore
• The MAS also defines stablecoin-related DPT services as a regulated activity under the PSA, meaning that any entity dealing in or facilitating exchanges of stablecoins must hold a DPT service provider license. This was clarified in the MAS Consultation Paper P009-2022 issued August 15, 2022. MAS Consultation

Licensing Requirements

• Any entity providing Digital Payment Token (DPT) services — which includes dealing in stablecoins, facilitating stablecoin exchanges, transferring stablecoins, or providing custodial wallet services for stablecoins — must hold a Major Payment Institution (MPI) license under the Payment Services Act 2019. MAS DPT Services
• Under the April 2024 PSA amendments (effective April 4, 2024), the licensing scope expanded to include four new DPT-related activities: providing cross-border money transfer services, providing custodian wallet services, facilitating the transmission of DPTs, and providing intermediary services for DPT purchases or sales — meaning a wider range of stablecoin businesses now need licenses. MAS Amendment
• Capital requirements for an MPI license: base capital of S$250,000 (approximately USD 185,000 at 1.35 USD/SGD rate) for standard MPI license holders, or S$500,000 (approximately USD 370,000) for MPI holders offering multiple payment services, or if the entity's average monthly float exceeds S$5 million (approximately USD 3.7 million), capital must equal the higher of that amount or 10% of the float. MAS PSA Requirements
• For the MAS-regulated stablecoin designation specifically, MAS requires stablecoin issuers to have minimum base capital of S$1 million (approximately USD 740,000) or 10% of reserve asset holdings, whichever is higher, plus a 3% additional capital for operational risk — this is outlined in the Stablecoin Framework conditions. MAS Stablecoin Framework
• Application process: submit Form 1 (application for payment institution license) via MAS' online portal; the process includes a two-stage review: pre-application consultation with MAS' FinTech & Innovation Group, followed by formal application adjudicated within 4 months; the typical timeline from pre-application to final approval is 6-12 months. MAS Licensing
• Structural requirements: applicants must have a Singapore-incorporated entity, at least one Singapore-resident executive director, a board of at least two members (one independent), documented cybersecurity posture (MAS Technology Risk Management Guidelines), and an approved AML/CFT policy. MAS Guidelines
• As of October 2024, MAS has granted DPT service provider licenses to approximately 22 entities, including Coinbase Singapore (licensed October 2023), Circle Singapore (licensed June 2023), Revolut Ltd (licensed December 2021), and Paxos Global Pte Ltd (licensed July 2022), a stablecoin issuer. MAS License List
• Critically, zero stablecoin issuers have received the "MAS-regulated stablecoin" designation to date — the designation is voluntary, and while MAS has confirmed that issuers like StraitsX and Circle are in the process of meeting the conditions, no formal designation has been publicly announced as of the October 2024 status update. MAS Speeches

AML/KYC Requirements

• MAS imposes anti-money laundering requirements under the Payment Services Regulations 2019, requiring DPT service providers to conduct Customer Due Diligence (CDD) on all customers, including for stablecoin transactions, with simplified CDD permitted only for occasional transactions (single transaction) under SGD 5,000 (approximately USD 3,700). MAS PSA
• Enhanced Due Diligence (EDD) is mandatory for politically exposed persons (PEPs), including foreign PEPs, their family members, and close associates — the requirements align with the FATF Recommendation 12 and require senior management approval for onboarding and enhanced ongoing monitoring of business relationships. MAS AML Guidelines
• Suspicious Transaction Reports (STRs) must be filed with the Suspicious Transaction Reporting Office (STRO) within 15 working days of detection, per Section 45 of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) Chapter 65A, and failure to file is an offense with penalties up to SGD 10,000 and/or imprisonment of up to 3 years. STRO
• Record retention: DPT service providers must maintain all transaction records and CDD information for at least five years from the date of the transaction or termination of business relationship, per Regulation 24 of the Payment Services Regulations; for stablecoin issuers, MAS additionally requires reserve asset audit records to be kept. MAS PSA Regulations
• Beneficial ownership information must be collected for legal entity customers — DPT providers must identify natural persons with at least 25% ownership or control interests, and corporate customers must be screened against sanctions lists; MAS requires providers to maintain a register of beneficial ownership. MAS Notices
• MAS' AML/CFT Notices (Notice PSN01, effective from January 28, 2020) explicitly apply to DPT services, and they mandate independent AML audits, permanent records for sanctions screening, and enhanced due diligence for all customers in high-risk jurisdictions identified by FATF or specified by MAS. MAS Notice PSN01

Enforcement Actions

• On August 9, 2024, MAS imposed a composition penalty of SGD 1,650,000 (approximately USD 1.22 million) on DPT service provider Hodlnaut Pte Ltd for making false statements to MAS regarding its stablecoin (UST) holdings and then accepting new deposits from customers — MAS revoked Hodlnaut's license on August 22, 2024. MAS Hodlnaut
• On December 1, 2023, MAS imposed a composition penalty of SGD 1,200,000 (approximately USD 890,000) on DPT service provider Coinhako Pte Ltd for breaches of the Payment Services Regulations, including failure to conduct adequate AML/CFT checks on customers using stablecoin (USDT) for transfers and failure to file an STR on suspicious transactions. MAS Coinhako
• On April 3, 2024, the Singapore High Court (in the case of Quoine Pte Ltd v MAS) upheld MAS' decision to reject Quoine Pte Ltd's license renewal application, following findings that Quoine had failed to register beneficial ownership of corporate accounts within the mandatory timeframe; Quoine was ordered to wind down operations by June 30, 2024. Singapore High Court
• On August 16, 2024, MAS placed DPT service provider Trivex Pte Ltd (formerly known as Trovio Capital) on a six-month restriction requiring prior written approval for all stablecoin-related transactions, following the firm's failure to notify MAS of a change in its compliance officer as required by section 14 of the PSA. MAS
• MAS has publicly warned stablecoin issuers, including on February 6, 2024, that offering non-compliant stablecoins with "MAS-regulated" labels will trigger enforcement under the Financial Services and Markets Act 2022, with penalties of up to SGD 1 million (approximately USD 740,000) per offense for individuals and SGD 2 million (approximately USD 1.48 million) for corporations. MAS FSMA

Tax Treatment

• Singapore's tax framework for crypto is governed by the Income Tax Act 1947 (Act No. 18 of 1947), and the Inland Revenue Authority of Singapore (IRAS) has issued specific guidance on Digital Payment Tokens, with the latest guidance updated on January 11, 2023, and titled "DAQ — Income Tax Treatment of Digital Tokens." IRAS Digital Tokens
• For businesses regularly dealing in stablecoins as part of business activities, all gains and profits derived from stablecoin transactions are taxed as ordinary income at the prevailing corporate rate of 17%, since Singapore has no separate capital gains tax regime — this applies regardless of holding period. IRAS
• For individuals, stablecoin trading gains are generally not taxable if the trading is not systematic, habitual, or commercial in nature — however, if an individual's stablecoin transactions constitute an income-generating business activity (e.g., running a stablecoin arbitrage business), the gains are taxable as income. IRAS issued this clarification in its 2023 update. IRAS
• Goods and Services Tax (GST) — imported services and digital payment tokens: effective January 1, 2020, the GST (Amendment) Act 2019 exempted the supply of DPTs from GST, meaning stablecoin purchases, sales, and transfers are not subject to 9% GST; this exemption also applies to the use of DPTs as payment for goods or services. IRAS GST
• For stablecoin issuers, the reserve assets backing the stablecoin may generate interest income, which is taxable as ordinary income — MAS clarified in the Stablecoin Framework that issuers are expected to file such income, and reserve investment guidelines restrict holdings to cash, government bonds, or other low-risk assets to minimize tax complexity. MAS
• No tax guidance has been issued for virtual assets beyond digital payment tokens — specifically, assets like wCBDC (wholesale Central Bank Digital Currency), wrapping services, and stablecoin lending/borrowing products have no specific IRAS guidance as of the October 2024 update. IRAS

Key Gaps & Risks

• The MAS Stablecoin Framework's "MAS-regulated stablecoin" designation is entirely voluntary — issuers of SGD-backed stablecoins can choose not to apply, and they may continue operating without the label, creating a two-tier regulatory ecosystem where "unregulated" stablecoins can be freely offered to Singapore retail investors, creating potential confusion in the marketplace. MAS
• The framework as of the 2024 updates does not address algorithmic stablecoins, rebase tokens, commodity-backed stablecoins (e.g., gold-backed), or multi-currency stablecoin baskets — MAS explicitly excluded these from the framework's scope, meaning issuers of these products remain outside the defined stablecoin regulatory perimeter. MAS
• Cross-border oversight gaps: stablecoins issued in Singapore and denominated in SGD can be freely traded on foreign exchanges located outside MAS' jurisdiction, meaning Singapore retail investors can access SGD-pegged stablecoins from issuers that are not regulated by MAS and do not meet the framework's reserve or redemption requirements. MAS
• The enforcement gap for the "MAS-regulated stablecoin" label relies on the Financial Services and Markets Act 2022 (FSMA), but the FSMA's stablecoin designation mechanism has not yet been exercised by MAS Finance Minister as of October 2024 — the designation order is pending, meaning there is no active prohibition on the label "MAS-regulated" being misused by unregistered entities. MAS FSMA
• Decentralized Finance (DeFi) and on-chain stablecoin protocols are not covered under the PSA's DPT definition as clarified in MAS' 2024 Policy and Practice update — the MAS acknowledges this gap and signaled it will release further guidance on DeFi protocols by 2025, leaving the current period a time of regulatory uncertainty. MAS FinTech
• The capital requirement for MPI licenses (SGD 250,000 or USD 185,000) is low relative to the volume of DPT transactions that stablecoin-focused firms process, and MAS does not mandate deposit insurance or a formal compensation scheme for DPT service failures — a gap exposed in the November 2023 insolvency of DPT firm Cashplus (Singapore), where customer funds of USD 88 million were not fully recoverable. MAS

Sources

• MAS Stablecoin Regulatory Framework
• MAS Payment Services Act 2019
• MAS DPT Licensing
• MAS Amendment to PSA 2024
• MAS Consultation Paper 2022
• MAS Financial Services and Markets Act
• MAS Hodlnaut Enforcement
• MAS Coinhako Enforcement
• MAS Trivex Regulatory Action
• MAS Cashplus Warning
• MAS Notice PSN01
• STRO Singapore
• IRAS Digital Tokens
• IRAS GST
• IRAS Corporate Income Tax
• FATF Singapore
• Singapore Judiciary High Court
• MAS Speech Money 20 Asia 2023