Singapore Proposes Stablecoin Yield Ban and 100% Reserve Backing

Singapore’s financial regulator has proposed banning issuers of regulated stablecoins from paying interest or other yield to holders, while requiring full reserve backing and stronger safeguards for the sector.

The Monetary Authority of Singapore (MAS) outlined the measures in a consultation on amendments to the Payment Services Act 2019. According to Coin Bureau, the proposal would require stablecoin issuers to maintain reserves equal to at least 100% of tokens in circulation, with the assets segregated from the issuer’s own funds and held with licensed financial institutions.

The consultation is aimed at putting Singapore’s existing single-currency stablecoin framework into legislation. MAS is also proposing stress testing, recovery arrangements and orderly wind-down plans designed to ensure issuers can manage financial or operational distress without undermining holders’ ability to redeem their tokens.

Singapore Draws a Clear Line Between Stablecoins and Yield Products

The proposed prohibition on interest would prevent issuers from providing yield or other benefits linked to the amount or duration of a holder’s stablecoin holdings.

The approach places Singapore increasingly in line with major international regulatory frameworks. Under the European Union’s Markets in Crypto-Assets Regulation, issuers and crypto-asset service providers are prohibited from granting interest on both e-money tokens and asset-referenced tokens.

The European Central Bank has also highlighted the distinction between stablecoins and yield-bearing money-market products, noting that regulated EU stablecoins cannot pay interest directly while money-market funds can distribute returns generated by underlying assets.

For the stablecoin industry, the policy direction could reinforce the treatment of regulated tokens primarily as payment and settlement instruments rather than savings or investment products. That distinction may become increasingly important as stablecoins expand into cross-border payments and tokenized financial markets.

MAS Opens Door to Foreign Stablecoins

Singapore is not proposing to isolate its framework from overseas markets. MAS is considering allowing certain jointly issued Singapore-foreign stablecoins to qualify for the regulated designation, provided associated risks are adequately controlled. It is also considering limited recognition for foreign-issued stablecoins governed under comparable regulatory regimes.

Only licensed issuers would be permitted to markets their tokens as “MAS-regulated stablecoins,” creating a formal distinction between supervised stablecoins and other digital payment tokens.

The consultation remains open for public feedback until October 16, 2026. MAS has not yet announced an implementation date, making the consultation process the next key milestone for Singapore’s stablecoin regime.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.