Central Bank of Singapore proposes new rules for stablecoin issuers

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Monetary managementSingapore (MAS) proposed a more stringent approach to regulating stablecoin issuers to protect retail investors from significant losses.

MAS Singapore has put forward several newproposals for regulating the crypto industry. In particular, the agency wants to establish capital and reserve requirements for stablecoin issuers. The Central Bank also proposes to prohibit issuers from engaging in other activities that may pose additional risks - lending or staking, which allow clients to block their cryptocurrency and receive interest from it.

"Monetary Authority of Singapore""is concerned that retail investors may not have the financial cushion to withstand large losses resulting from speculative trading in markets they do not understand," the announcement said.

The Central Bank believes that issuers of stablecoins shouldmore strictly regulated and tested more frequently to ensure the reliability of reserves and their adequacy. An example is given by Circle, the issuer of the stable coin USD Coin (USDC). Under MAS's proposal, Circle would be required to maintain cash and cash-equivalent reserves to match the $43.8 coin in circulation and verify that match daily.

The new measures also aim to set a basic capital requirement of over S$1 million ($709,000).

On the development of new measures that will protectconsumers and participants in the cryptocurrency industry, MAS reported in July that it was considering the possibility of establishing rules when using margin trading with cryptocurrencies.