Singapore Warns Unregulated Stablecoins Pose Systemic Risk Ahead of New Regulatory Framework

• MAS warns that unregulated stablecoins have a poor record of maintaining their peg
• Only fully regulated, reserve-backed stablecoins will qualify as settlement assets in Singapore
• New legislation for Singapore’s stablecoin framework is nearing implementation
• MAS highlights need for stability, credible reserves, and clear redemption rights
• Singapore expands focus on CBDCs and tokenized bank liabilities under the BLOOM initiative

Singapore’s central bank has issued a clear warning that unregulated stablecoins may pose systemic risks to the country’s financial system. As Singapore prepares to roll out its new stablecoin rules, the Monetary Authority of Singapore (MAS) is signaling that only fully regulated and properly backed tokens will be allowed to operate as trusted settlement assets.

Speaking at the Singapore FinTech Festival, MAS Managing Director Chia Der Jiun emphasized that many unregulated stablecoins have repeatedly failed to maintain their peg, creating instability similar to the market stresses seen in money-market fund runs in 2008. Chia noted that although stablecoins are often promoted as flexible, open systems that can move across applications and borders, agility cannot replace financial soundness.

He stressed that the sector’s next phase requires more than speed and programmability. Stability must be the foundation, supported by transparent reserves and reliable redemption rights. Without these safeguards, confidence can erode quickly, especially if weak issuers trigger broader market distrust.

MAS is now preparing new legislation following the finalization of its single-currency stablecoin framework earlier this year. Released on August 15, the framework focuses heavily on reserve backing and redemption reliability, signaling that only well-capitalized and fully supervised issuers will qualify as settlement-grade assets in Singapore. Chia added that rules may evolve in the future, especially if certain regulated stablecoins become systemically important. In such cases, MAS may strengthen oversight, expand cross-border cooperation, and even consider granting access to central bank facilities.

Alongside stablecoin policy, Chia outlined MAS’s broader vision for digital money, which includes wholesale CBDCs and tokenized bank liabilities. These tools will be tested under MAS’s BLOOM initiative — a program exploring how different digital settlement assets can function within a tokenized financial ecosystem. MAS is working with industry partners and encouraging more financial institutions to participate in these trials.

Singapore’s message is clear: stability, regulation, and trustworthy reserve systems are essential as digital money becomes more deeply integrated into global finance.

Final Thought

As Singapore moves closer to implementing its stablecoin rules, the MAS is sending a strong signal that only fully regulated and reliably backed stablecoins will have a place in the country’s financial system. At the same time, Singapore continues to position itself as a leader in next-generation digital money through CBDC research and tokenization initiatives, reinforcing its reputation as one of the world’s most forward-thinking financial hubs.