Key Highlights
- The Monetary Authority of Singapore (MAS) managing director Chia Der Jiun emphasizes the importance of regulated stablecoins for value stability.
- MAS has finalized its stablecoin regulatory regime with draft legislation being prepared to ensure sound and robust regulation.
- Chia highlights risks associated with unregulated stablecoins, including de-pegging which can erode confidence and trigger runs on other assets.
- The central bank is exploring the use of tokenised assets and digital currencies like CBDCs, collaborating with financial institutions for trials.
Regulation of Stablecoins: A Critical Step in Financial Stability
In his keynote address at the Singapore FinTech Festival 2025 on November 13th, Monetary Authority of Singapore (MAS) managing director Chia Der Jiun underscored the importance of regulated stablecoins for maintaining value stability. This comes amidst a growing interest and investment in digital assets across various sectors.
Stablecoins are a type of cryptocurrency designed to limit price volatility by pegging their value to a currency, commodity or financial instrument. According to Chia, recurrent de-pegging can erode confidence and trigger runs on other stablecoins, drawing parallels with the 2008 financial crisis where money market funds that broke the buck triggered similar dynamics among other related assets.
“Recurrent de-pegging can erode confidence, and trigger runs on other stablecoins,” said Chia. “Such unregulated stablecoins would not be suitable as safe settlement assets for large wholesale transactions.”
Regulatory Framework for Stability
MAS has taken significant steps towards establishing a robust regulatory framework for stablecoins. Chia revealed that the central bank has finalized the features of its stablecoin regulatory regime, with draft legislation currently under preparation. He emphasized that sound and reliable reserve backing is crucial for these digital assets.
Chia also highlighted potential future developments in tokenised assets or “asset-backed tokens.” These are digital representations of real-world assets like bonds and equities on the blockchain.
While progress has been made, several challenges remain before widespread adoption becomes a reality. These include standardising asset-backed tokens, ensuring network interoperability, and developing deep pools of safe and reliable settlement assets.
“Under our regime, we have given importance to sound reserve backing and redemption reliability,” said Chia. “Over time, if some regulated stablecoins become systemic, regulatory frameworks will need to be strengthened further, cross-border regulatory cooperation enhanced, and access to central bank facilities considered.”
Exploring CBDCs and Tokenisation
The discussion extended beyond just stablecoins to include other digital assets like central bank digital currencies (CBDCs) and tokenised bank liabilities. Chia announced successful interbank overnight lending transactions using the first live trial issuance of Singapore-dollar wholesale CBDC for settlement.
He also noted that MAS is collaborating with financial institutions to explore the use of CBDCs, tokenised bank liabilities, and regulated stablecoins. The Borderless, Liquid, Open, Online, Multi-currency (BLOOM) initiative supports industry experimentation in this space, providing a platform for trials involving tokenised bank liabilities and regulated stablecoins.
Chia concluded by emphasizing the collaborative effort required to build a tokenised future. “The tokenised future cannot be built by a single party – it will require collaboration between the private and public sectors, within and across jurisdictions,” he stated.
Industry Collaboration for Tokenisation
The Singapore FinTech Festival 2025 featured speakers including Deputy Prime Minister Gan Kim Yong and UOB CEO Wee Ee Cheong. The event provided a platform for industry leaders to discuss the future of financial technology, with a focus on tokenisation and digital currencies.
Chia’s remarks reflect the ongoing effort by MAS to stay at the forefront of technological innovation while ensuring robust regulation. As stablecoins and other digital assets continue to evolve, the path towards widespread adoption will depend heavily on collaboration and standardisation efforts within the industry.
