The minister in charge of the bank, Tharman Shanmugaratnam, stated that the Monetary Authority of Singapore (MAS), the nation’s centralbank, is “actively examining” its strategy for regulating stablecoins.
Stablecoins are cryptocurrencies pegged to the value of other assets, typically to a major currency like the U.S. dollar, as per Shanmugaratnam, who was responding to a question during a parliamentary session on Monday. The bank is “assessing the merits” of a regulatory regime that targets “the specific characteristics and risks” of stablecoins.
So according Shanmugaratnam, the MAS is considering limiting the reserve requirements for stablecoin issuers in light of the recent fall of terraUSD (UST), a stablecoin that lost its peg to the U.S. dollar in May.
In the upcoming months, the central bank intends to consult the general public over potential stablecoin regulations.
Regulators are working to establish regulatory frameworks for stablecoins, particularly those that run the risk of endangering the stability of larger financial systems. These regulators include those in major economies like the European Union, the United Kingdom, and the United States.
MAS authorities have threatened to tighten down on cryptocurrency companies acting improperly in the nation, despite Shanmugaratnam’s claims that the impact of the crypto market meltdown on traditional financial systems is minimal and that banks in Singapore have “insignificant exposures” to cryptocurrency.