Crypto investors hoping to earn passive income on dollar-backed digital assets in Singapore may soon need to look elsewhere. Under proposed legislative amendments to the Payment Services Act, the Monetary Authority of Singapore (MAS) is seeking to explicitly ban issuers from paying interest or yield on regulated stablecoins.
For everyday users, the move establishes a strict legal wall between digital cash meant for payments and speculative investment assets. If a token offers interest, it will not qualify for the official “MAS-regulated stablecoin” label.
Drawing a Line Between Cash and Investments
The consultation paper sets out key legislative updates to give legal force to the MAS Single-Currency Stablecoin (MAS-SCS) framework. Under the proposed rules, licensed issuers are prohibited from offering any interest, return, or commercial benefit directly or indirectly tied to a user’s holding balance.
MAS emphasized that this prohibition aligns with international regulatory practices, reinforcing that regulated stablecoins are designed purely as a trusted medium of exchange and settlement asset and not a savings account or yield-generating product.
Tighter Safeguards and Operational Controls
Beyond stripping out yields, MAS is proposing a suite of enhanced consumer protection and risk management requirements for licensed stablecoin issuers:
- Mandatory Safeguarding: Customer monies received prior to stablecoin minting, or owed during direct redemptions, must be safeguarded immediately to ringfence consumer funds in insolvency scenarios.
- Stress Testing & Capital Buffers: Issuers will be required to conduct quarterly stress testing against redemption runs and market shocks, with MAS holding powers to mandate additional capital or liquidity buffers.
- Freeze and Burn Capabilities: Issuers must maintain the technical capability to trace, freeze, and burn stablecoins if they are identified as being used in illicit financial activities.
- Wind-Down Plans: Issuers must maintain board-approved recovery and orderly wind-down plans, ensuring redemption requests are fully satisfied before exiting the market.
Reining in Unregulated “Stablecoins”
Tokens that do not meet these stringent criteria will not be allowed to represent themselves as MAS-regulated. Instead, non-MAS-regulated stablecoins will continue to be classified as Digital Payment Tokens (DPTs).
To prevent retail confusion, MAS is considering imposing strict rules on crypto platforms offering unregulated stablecoins. These include mandatory risk warnings, clear disclosures on underlying backing assets, and potential restrictions against marketing non-regulated tokens using the word “stablecoin” to retail users.
Cross-Border Rules and Next Steps
The proposal also introduces frameworks to regulate multi-jurisdictional stablecoin issuances, recognize select foreign-regulated stablecoins, and designate systemic stablecoins that could impact broader financial stability.
The Singaporean public and industry stakeholders have until October 16, 2026, to submit feedback on the consultation paper.
This article is published on BitPinas: Singapore Proposes Ban on Yields on Regulated Stablecoins
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