The Monetary Authority of Singapore (MAS), the country's central bank, is "actively reviewing" its approach to regulating stablecoins, Tharman Shanmugaratnam, the minister in charge of the bank, said.
The bank is "assessing the merits" of a regulatory regime that targets "the specific characteristics and risks" of stablecoins, which are cryptocurrencies pegged to the value of other assets, typically to a major currency like the U.S. dollar, Shanmugaratnam said while answering a question during a parliamentary session on Monday.
The MAS is looking at potentially regulating reserve requirements for stablecoin issuers, Shanmugaratnam said, referencing the recent collapse of terraUSD (UST) a stablecoin that lost its U.S. dollar peg in May.
"The recent chain of high-profile failures in the cryptocurrency markets, starting from the collapse of the terraUSD and luna tokens, illustrates the high risks involved in investments in cryptocurrencies that MAS has warned the public about repeatedly," Shanmugaratnam said.
The central bank plans to consult the public on possible rules for stablecoins in the coming months, according to Shanmugaratnam.
Regulators around the world, including those in major economies like the European Union, the U.K. and the U.S., are working to set up regulatory frameworks for stablecoins, particularly ones that are at risk of hurting the stability of broader financial systems.
Although Shanmugaratnam said that the spillover from the crypto market crash to mainstream financial systems is limited and that banks in Singapore have "insignificant exposures" to crypto, MAS officials have vowed to crack down on crypto firms behaving badly in the country.
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