Singapore has emerged as a leading jurisdiction for fintech innovation, particularly in the digital asset space. For companies looking to issue a high-yield stablecoin, Singapore offers a clear regulatory landscape under the Payment Services Act 2019 (PSA) and the Securities and Futures Act 2001 (SFA). However, compliance is critical, especially for tokens that offer a return or yield.
Determine the Nature of the Stablecoin
A stablecoin may be:
- Fiat-backed (pegged to a national currency, e.g., USD);
- Crypto-collateralised;
- Algorithmic or hybrid.
If the stablecoin offers interest or any form of yield, it may be classified as a capital markets product under the SFA, such as a debenture or unit in a collective investment scheme (CIS).
Licensing Requirements
Issuers of stablecoins in Singapore may need one or more of the following:
- Major Payment Institution (MPI) Licence under the PSA if the token functions as a digital payment token (DPT);
- Capital Markets Services (CMS) Licence under the SFA if the token is a CIS, security, or offers a return linked to pooled funds;
- Exemptions: Certain offerings may rely on exemptions under sections 272A–272D of the SFA (e.g. small offers, private placement, or institutional offers).
AML/CFT Compliance
Stablecoin issuers are required to implement robust Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) procedures. This includes:
- Know-Your-Customer (KYC) protocols;
- Transaction monitoring;
- Reporting suspicious activity to MAS.
MAS Guidelines
The Monetary Authority of Singapore (MAS) has issued specific guidance on stablecoins, including a recent consultation on the regulation of single-currency stablecoins (SCS). Projects must:
- Maintain reserve assets;
- Meet redemption requirements;
- Ensure transparency and auditability.
Offer Documentation and Marketing
Any public offering of stablecoins that may be construed as securities requires:
- A registered prospectus or reliance on an exemption;
- Disclosure of risks, terms, and rights of redemption;
- Compliance with the Advertising Restrictions under the SFA.
Conclusion
Launching a high-yield stablecoin in Singapore is legally feasible but requires close attention to licensing, AML obligations, and capital markets rules. Engaging legal counsel early is essential to ensure compliance with the PSA and SFA while structuring the token’s yield features appropriately.
