SINGAPORE – Singapore’s stablecoin regulatory framework is more mature than its peers like Hong Kong and the United States, but industry experts said widespread adoption of the digital currency here will take time.
Stablecoins are a type of cryptocurrency whose value is pegged to a currency, commodity or financial instrument to reduce price volatility. They are commonly used as a more stable medium of exchange, such as for payments and trading, than highly volatile tokens like Bitcoin.
Popular stablecoins such as the USDT and USDC, and crypto-related stocks like Circle and Coinbase, have traded heavily since the US Senate on June 17 passed a landmark Bill to regulate US dollar-pegged stablecoins.
If signed into law, the new rules will require stablecoins to be backed by liquid assets – such as US dollars and short-term Treasury bills – and for issuers to disclose their reserves monthly.
Stablecoins have gained some traction in Singapore since August 2023, when the Monetary Authority of Singapore (MAS) set out its requirements for stablecoin issuers following two consultations in 2022.
For example, they are currently being used to maintain reserve assets valued at no less than 100 per cent of the outstanding single-currency stablecoins (SCS) in circulation at all times. The reserves must be held in cash, cash equivalents, or in three-month Singapore Government bonds, and denominated in the same currency as the peg.
Issuers must also have a base capital of at least $1 million or 50 per cent of their annual operating expenses, whichever is higher. They are further required to hold liquid assets worth more than half of annual operating expenses, or enough to support recovery or an orderly wind-down.
Only SCS pegged to the Singapore dollar or one of the 10 most heavily traded and liquid currencies in the world known as the Group of 10 – such as the US dollar or Japanese yen – can be regulated under the framework.
MAS also said that SCS issuers have to issue solely out of Singapore, as it is currently difficult to monitor and verify the adequacy and availability of reserve assets held overseas.
Mr Samson Leo, chief legal officer at payments firm StraitsX, said Singapore’s stablecoin industry has evolved from early experimentation to a well-regulated and competitive ecosystem.
“The turning point came with the introduction of the SCS framework, which brought much-needed regulatory clarity on reserve backing, redemption rights, and operational standards,” he said.
“MAS was well ahead of its time in comparison to Hong Kong and the US, having commenced public consultations for the SCS framework in October 2022 and finalising it in August 2023.”
StraitsX began issuing Singapore-dollar backed stablecoin XSGD back in 2020. The stablecoin, which is fully backed 1:1 by reserves held with DBS Bank and Standard Chartered, allows users another option for payment, including real-time cross-border payments and on-chain settlement.
Mr Leo noted that the SCS framework builds on MAS’ regulation of digital payment tokens under the Payment Services Act 2019, and imposes a more targeted and stringent set of rules for stablecoin issuers.
“This layered approach reflects MAS’ proactive regulatory posture in mitigating the unique consumer risks posed by stablecoins,” he said.
Ms Angela Ang, who heads policy and strategic partnerships for Asia-Pacific at blockchain intelligence firm TRM Labs, noted that the Republic was one of the first countries to regulate stablecoins.
Since 2020, stablecoin activities have fallen under the Payment Services Act as digital payment token services.
“The industry has been anticipating the final legislation since MAS concluded its public consultation in August 2023,” added Ms Ang.
“When it comes, it will mark another step forward in regulatory clarity for stablecoins here – MAS has also granted licences to several issuers since 2023, which is strong proof of industry interest in issuing stablecoins out of Singapore.”
But a “significant restriction” is that stablecoins regulated under MAS’ framework must be issued only in Singapore, noted Ms Ang.
“That rules out stablecoins already issued elsewhere – it could also pose challenges for issuers who start in Singapore but later want to expand by issuing in other major hubs like the US,” she said.
“MAS has signalled it’s watching global trends and remains open to widening the scope. If that happens, it could create strong tailwinds for stablecoin issuance here.”
Ms Katalin Tischhauser, head of investment research at digital banking group Sygnum, said MAS’ framework is rigorous yet clear, and sets a high compliance bar that gives institutional players the confidence to operate here.
But on the retail front, the landscape reflects what one would expect in a developed market like Singapore, she said.
“Most stablecoin activity centres around crypto trading rather than morning coffee purchases – they don’t really solve a pain point for the average consumer; current demand largely comes from crypto-engaged users who maintain significant stablecoin holdings for trading convenience,” said Ms Tischhauser.
Broader adoption would require meaningful incentives to adopt alternative payment methods like stablecoins, but unlike emerging markets where currency volatility pushes people towards dollar-pegged alternatives, the Republic’s stable financial infrastructure does not create that urgency, she noted.
Ms Tischhauser said that where things get “exciting” is institutional adoption. Banks and payment providers are actively testing settlement solutions on private blockchains.
“MAS has built a regulatory foundation that institutional players trust – perfect for wholesale use cases, though it won’t necessarily encourage the average Singaporean consumer to pay with stablecoins,” she said.
MAS launched Project Orchid in 2021 to explore the infrastructure needed for a digital Singapore dollar. In 2023, it announced that several financial institutions and companies – including Ant International, Grab and HSBC – were exploring trials involving purpose-bound money, a form of tokenised digital currency.
It also said it would begin developing central bank digital currencies for wholesale interbank settlement in 2024.
Mr Rahul Advani, global co-head of policy at blockchain payments firm Ripple, said institutional adoption of stablecoins in Singapore will lay the groundwork for broader consumer use.
He noted that large-scale retail payments might still be nascent, but potential growth areas include cheaper remittances as well as e-commerce and online payments.
“For retail payments, the path may be slower but it is certainly feasible – traditional payment methods are already highly efficient in Singapore, but stablecoins can offer unique advantages in certain use cases, especially for online transactions and for a growing segment of the population comfortable with digital assets,” he said.
Ms Hannah Puganenthran, head of compliance at cryptocurrency exchange Independent Reserve Singapore, offered a more cautious view, noting that stablecoin adoption will depend on both consumer and merchant demand.
“If merchants in Singapore don’t see clear interest from their customers, there’s little incentive to support stablecoin payments,” she said.
“Stablecoins are still often viewed as part of the broader crypto landscape, and are associated with speculation… This perception, combined with a cautious stance towards digital payment tokens, continues to limit adoption.”
“But regulatory clarity can address these concerns, and education and transparent regulatory standards will be essential to building trust and supporting broader use,” Ms Puganenthran added.
Some developments are already under way on the consumer front in Singapore.
Grab introduced the option to top up GrabPay e-wallets with cryptocurrencies in 2024, following a tie-up with payments firm Triple-A. Users can choose from five digital currencies – Bitcoin, Ether, StraitsX’s XSGD, and the US dollar-backed stablecoins USDC and USDT.
Separately, AXS has also partnered Triple-A to allow its app users to make top-ups and bill payments using cryptocurrencies such as Bitcoin, Ether, USDC and USDT.
Mr Ivan Wong, group chief financial officer of cryptocurrency exchange OSL, said that for stablecoins to gain broader adoption, the digital currency has to be integrated with existing payment ecosystems such as point-of-sale terminals, e-wallets, QR code networks and mobile banking apps.
In Singapore, this could mean embedding stablecoins within platforms like PayNow or GrabPay, making usage as intuitive as tapping an ez-link card or scanning a QR code, he said.
“As initiatives like MAS’ Project Orchid mature, we anticipate clearer guidance on wallet security, QR payment compatibility, and potential integration with CBDCs – critical components for enabling stablecoins to function at scale in everyday payment contexts,” he said.
Mr Eddie Hui, co-president and chief operating officer of digital asset platform MetaComp, said that over time, stablecoins can be embedded into more consumer-facing platforms in Singapore.
“As the ecosystem matures and more businesses adopt stablecoin rails, the benefits will increasingly flow to consumers in the form of lower fees, better rates and more efficient digital experiences… Singapore’s proactive regulatory environment and financial ecosystem give it a strong foundation to lead this transition regionally,” he said.
