Singapore proposes ban on stablecoin interest payments, opens consultation to October 16

Singapore’s central bank proposed a ban on interest payments for regulated stablecoin issuers on September 1, 2026, as part of a broader push to write its stablecoin framework into law.

The Monetary Authority of Singapore’s consultation paper, open for public feedback until October 16, 2026, would also require issuers to back tokens with 100% reserves and offer redemption at par.

MAS-regulated stablecoin framework targets stronger safeguards

The proposed legislative amendments are designed to formalize the standards required for a MAS-regulated stablecoin and strengthen the regulatory framework surrounding issuers.

MAS Deputy Managing Director for Financial Supervision Ho Hern Shin said the changes were intended to balance innovation with financial stability as tokenization gains greater traction across global markets.

“MAS’ proposed legislative amendments will give effect to a stablecoin framework that promotes responsible financial innovation. The framework will provide clear regulatory guardrails for stablecoins that meet high standards of value stability and governance,”  Ho Hern Shin, Deputy Managing Director for Financial Supervision, Monetary Authority of Singapore.

Ho added that trusted and properly supervised stablecoins could play an increasingly important role in the development of tokenized financial markets.

“This is important as asset tokenisation gains traction. Trusted and well-regulated stablecoins can serve as a credible settlement asset in tokenised financial markets, while mitigating risks to users and the broader financial system,” — Ho Hern Shin, Deputy Managing Director for Financial Supervision, Monetary Authority of Singapore.

The consultation seeks feedback on several core requirements, including capital adequacy, value stability, redemption at par and issuer disclosures. MAS is also proposing additional protections for customer funds received before stablecoins are issued.

For issuers seeking recognition under the MAS-regulated stablecoin framework, the proposed safeguards would go beyond reserve requirements by introducing formal stress tests and recovery mechanisms designed to address financial or operational disruptions.

The authority also wants issuers to establish orderly wind-down plans, ensuring that the failure of an issuer can be managed without unnecessarily exposing users or the wider financial system to disruption.

Singapore proposes interest ban for qualifying stablecoins

One of the most notable elements of the consultation is the proposed prohibition on interest payments by issuers of a MAS-regulated stablecoin.

If adopted, the restriction would prevent licensed issuers from paying interest directly to holders of qualifying stablecoins. The proposal places Singapore among jurisdictions grappling with whether stablecoins designed primarily for payments should offer returns similar to traditional savings products.

The policy distinction is important because stablecoins are generally intended to maintain a relatively fixed value through reserve assets, collateral, redemption mechanisms or other market structures. Their designs, however, can vary substantially.

Yield-bearing stablecoin models may present different policy and financial risks from payment-focused tokens backed by cash and other highly liquid reserve assets.

MAS has included the proposed interest restriction as part of a broader package aimed at defining what a MAS-regulated stablecoin should represent within Singapore’s financial system.

The issue of stablecoin rewards has also attracted attention internationally, particularly as policymakers examine whether interest-bearing digital assets could compete with traditional bank deposits and affect lending markets.

Singapore’s consultation makes clear that the proposed ban remains under consideration and is not yet a rule in force.

Foreign stablecoins could gain limited recognition

The proposals would also expand the existing framework by creating potential pathways for stablecoins issued across borders.

Singapore’s original stablecoin regime applies primarily to single-currency stablecoins issued domestically and pegged to the Singapore dollar or a currency from the Group of 10.

The G10 currencies covered under the framework include the U.S. dollar, euro, Japanese yen, British pound sterling, Swiss franc, Canadian dollar, Australian dollar, New Zealand dollar, Norwegian krone and Swedish krona.

The framework adopted in 2023 established requirements related to reserve backing, minimum capital, redemption timelines and issuer disclosures.

Under the latest proposals, stablecoins jointly issued by Singaporean and foreign entities could potentially qualify as a MAS-regulated stablecoin where the associated operational and regulatory risks are sufficiently addressed.

MAS is also considering whether a limited number of foreign-issued stablecoins could be recognized if they are supervised under overseas regulatory frameworks deemed comparable to Singapore’s standards.

However, recognition would not be automatic. The proposals indicate that Singapore intends to maintain a selective approach rather than extending recognition to every stablecoin approved by a foreign regulator.

A qualifying foreign-issued MAS-regulated stablecoin could potentially support cross-border wholesale transactions, while jointly issued tokens could carry the MAS designation if they meet the authority’s regulatory and operational requirements.

The cross-border proposals come as MAS continues separate work involving tokenized settlement and digital financial infrastructure, areas the central bank has been testing alongside industry participants.

Consultation remains open until Oct. 16

The proposed changes remain subject to public consultation, and MAS is accepting feedback on the legislation and related policy positions until Oct. 16.

That means the proposed interest prohibition, foreign-recognition mechanisms and enhanced issuer requirements have not yet taken legal effect.

The consultation could nonetheless shape the next stage of Singapore’s approach to stablecoin regulation, particularly as financial institutions and technology firms increasingly explore tokenized assets and blockchain-based settlement systems.

By establishing clearer requirements around value stability, redemption, governance and financial resilience, MAS is seeking to define the conditions under which a MAS-regulated stablecoin can be used as a credible settlement instrument.

The proposed framework also reflects Singapore’s effort to accommodate international developments without automatically importing foreign regulatory decisions into its domestic system.

For the crypto and financial services industries, the consultation will determine whether the final rules preserve the proposed ban on issuer-paid interest and how broadly Singapore opens its market to jointly issued and foreign-supervised stablecoins.

If adopted substantially in its current form, the framework would give issuers of a MAS-regulated stablecoin clearer regulatory boundaries while imposing stronger obligations intended to protect users and support financial stability.