What are Stablecoins and How are They Regulated?

On 13 November 2025, Singapore’s central bank, the Monetary Authority of Singapore (MAS) announced that it would be holding trials to issue tokenised MAS bills in 2026, as well as bringing in laws to regulate stablecoins as it moves forward with plans to build a scalable and secure tokenised financial ecosystem.

Stablecoins have moved from being considered a niche cryptocurrency to mainstream infrastructure for digital payments and trading. They are currently valued at US$250 billion, with the stablecoin market expected to grow two to three times by 2028. In Singapore, they sit at the crossroads of finance, technology, and regulation.

Whether you’re a business considering stablecoins for transactions, or a consumer thinking about holding them, it helps to understand what they are, how they are used, and the current regulatory framework for stablecoins in Singapore. Read on to learn more about:

• What exactly is a stablecoin?
• Why use stablecoins? What are the potential risks?
• How are stablecoins currently regulated in Singapore?
• What can consumers do if stablecoin issuers fail to comply with MAS’ requirements?

What Exactly is a Stablecoin?

A stablecoin is a form of cryptocurrency designed to maintain a stable value relative to a certain asset, usually a flat currency such as the Singapore dollar (SGD) or the US dollar (USD). Stablecoins are far less volatile compared to other cryptocurrencies (for example, Bitcoin), and therefore offer more price stability.

Stablecoins typically fall into one of two categories:

1. Fully reserved stablecoins; and
2. Algorithmic stablecoins.

1. Fully reserved stablecoins

Fully reserved stablecoins are generally backed one-to-one by high-quality, liquid assets such as fiat currency or short-term government securities held in reserve.

Examples of such stablecoins include the Singapore dollar-backed stablecoin, XSGD, which was launched on the Coinbase cryptocurrency exchange in early October 2025 in partnership with its issuer, StraitsX. It is pegged to the Singapore dollar at a one-to-one rate and is fully backed by reserve assets held by DBS and Standard Chartered. This means that for every one XSGD in circulation, there is one Singapore dollar held in reserve accounts by these banks.

As each coin issued is supported by an underlying asset, this helps keep their prices stable.

2. Algorithmic stablecoins

Algorithmic stablecoins maintain their peg through smart contracts that respond to supply and demand imbalances by what is known as minting or burning tokens.

For example, if an algorithmic stablecoin trades above its peg, additional tokens are minted to reduce its price. Conversely, if it trades below its peg, tokens are burned to increase its price. As compared to fully reserved stablecoins, algorithmic stablecoins are generally higher risk and subject to greater market volatility.

Why Use Stablecoins? What are the Potential Risks?

Stablecoins have significantly lower volatility compared with other cryptocurrencies, and they can be automatically controlled or managed.

Currently, stablecoins are primarily used for trading crypto assets, sale and purchase of goods and services (for example, Stripe, the second-largest online payments processor, allows users to pay US-based merchants with stablecoins), insulating against local currency instability, as well as sending cross-border payments or international remittances. This is because stablecoins are available 24/7 and can therefore bypass fixed banking hours and global borders, offering greater flexibility for global users and are easy to transact.

However, stablecoins are not without their risks:

• Reserve mismanagement: If an issuer fails to maintain adequate or transparent reserves, the stablecoin may lose its peg, leading to financial loss for holders.
• Regulatory non-compliance: Using or promoting unregulated stablecoins may expose issuers and intermediaries to enforcement action under the Payment Services Act.
• Financial crime risks: Stablecoins can also be misused for money laundering or terrorism financing, which is why issuers must comply with anti-money-laundering (AML) and counter-terrorism financing (CFT) obligations – similar to those currently in place for financial institutions.

How are Stablecoins Currently Regulated in Singapore?

Singapore currently regulates stablecoin activities under the Payment Services Act as digital payment token (DPT) services. Under the Payment Services Act, a DPT refers to any cryptographically-secured digital representation of value that is used or intended to be used as a medium of exchange, i.e. cryptocurrency. Examples include Bitcoin, Ether, Litecoin and Monero.

Stablecoin issuers would need to apply for a licence to provide their services, and are also subject to regulations concerning anti-money laundering/countering the financing of terrorism, disclosure obligations, as well as annual audit requirements. You can refer to our Digital Payment Token Services Licence Guide in Singapore for a more detailed overview.

In August 2023, MAS finalised a dedicated framework for single‑currency stablecoins (SCS) pegged to SGD or any G10 currency (e.g., EUR, JPY, USD), where the issuers are based in Singapore. This new Stablecoin Regulatory Framework (SCS Framework) aims to bring trust and clarity to stablecoins issued in Singapore.

Only issuers that meet all of MAS’s requirements can be marketed as “MAS-regulated stablecoins”, which helps users identify which tokens are subject to Singapore’s regulatory safeguards versus other digital payment tokens. These requirements include:

• Value stability: SCS reserve assets will be subject to requirements relating to their composition, valuation, custody and audit, to give a high degree of assurance of value stability. Issuers must publish a clear whitepaper with details on the coin’s stabilisation mechanism, risks, and audit results.
• Capital: Issuers must maintain minimum base capital and liquid assets of S$1 million or 50% of annual operating costs, whichever is higher, to reduce the risk of insolvency. They are also required to hold liquid assets worth more than half of annual operating expenses, or enough to support recovery or an orderly wind-down, if necessary.
• Redemption at Par: Issuers must return the par value of SCS to holders within five business days from a redemption request.
• Disclosure: Issuers must provide appropriate disclosures to users, including information on the SCS’ value stabilising mechanism, rights of SCS holders, as well as the audit results of reserve assets. This will be done through a whitepaper.

Importantly, MAS has stressed that any issuer or person that misuses or misrepresents a token as an “MAS-regulated stablecoin” may be subject to penalties under MAS’s stablecoin regulatory framework and placed on MAS’s Investor Alert List. These penalties could include financial penalties or imprisonment (in the case of an individual).

MAS’s announcement in November 2025 would effectively give full effect to the SCS Framework, offering greater clarity on the regulation of stablecoins in Singapore.

What Can Consumers Do If Issuers Fail to Comply with MAS’ Requirements?

If a stablecoin issuer does not comply with MAS’s regulatory requirements or fails to honour redemption requests, consumers have several possible avenues for recourse.

As a precautionary step, before investing or transacting in stablecoins, it is important to verify whether the issuer or platform is regulated by MAS, by checking MAS’ Investor Alert List. If the issuer or platform appears on the list, then this is your sign to exercise caution and avoid further dealings.

However, if you have already invested in or transacted with an issuer and suspect non-compliance with regulatory requirements, then the first step to take is to lodge a complaint or report directly with MAS. You should provide details of the issuer and details of the alleged non-compliance for MAS to investigate further. This can be done via their guided form, which provides targeted information based on your specific needs.

Where significant sums of money are involved, you may also consider seeking legal advice on your options. These could include, for example, potential civil claims for misrepresentation, breach of contract, or restitution of funds (concurrent to any investigations that MAS might commence against the issuer). A lawyer can also advise on whether criminal breaches or other regulatory contraventions have occurred, and guide you through the best options available to get a desired outcome for your case. You may wish to engage a lawyer experienced in both civil and criminal matters through our Find a Lawyer service.

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Stablecoins offer the potential to facilitate faster and more efficient payments within digital markets. However, ensuring their stability and reliability as a form of digital currency is critical. MAS’ proposed rules-based framework to govern “single-currency pegged stablecoins” that meet specific criteria for credibility and redeemability is, therefore, a welcome step forward to build a secure and regulated environment for digital assets in Singapore, while supporting innovation in tokenised finance.