Impact of US GENIUS Act on Regulated Digital Assets and Recognition of Stablecoin Regulatory Framework

Mr Victor Lye asked the Prime Minister and Minister for Finance (a) what is the Ministry's assessment of the impact of the US Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) on Singapore's competitiveness as a global hub for regulated digital assets; and (b) whether MAS intends to seek US recognition of Singapore's Stablecoin Regulatory Framework as a comparable regime under the GENIUS Act.

The United States (US) Senate passed the GENIUS Act in July. It seeks to bring regulatory clarity to payment of stablecoins in the US, which is a subset of digital assets that is designed to maintain a stable value relative to a fixed monetary value, such as to one US dollar. Rule-making is underway, before finalised details of the Act are implemented by January 2027. Market participants generally expect it to spur interest and adoption of stablecoins and digital assets in the US and globally. However, it is too early to tell the scale and scope of adoption at this point.

Stablecoins adoption could potentially bring efficiency gains and lower costs for users as transactions are done on a shared ledger. However, if not well regulated, stablecoins could also introduce risks to the financial system. For example, if value stability is not maintained, it could result in a loss of confidence and result in rapid redemptions and fire-sales of the underlying assets backing the value of the stablecoin. In countries with weaker currencies, there are also concerns about currency substitution. It is therefore important that stablecoins and digital assets in general develop under regulatory guidance globally.

The Monetary Authority of Singapore (MAS) published a stablecoins regulatory framework in 2023 to ensure a high degree of value stability for stablecoins regulated in Singapore. The framework will distinguish well-regulated stablecoins from other crypto assets, which MAS has consistently warned about, because of risks to consumers from cryptocurrency speculation due to high volatility and the lack of inherent value. MAS is working on legislative amendments to formalise the framework and will issue a public consultation later this year.

Stablecoin regulatory developments in the US and Europe are still relatively new. MAS is following these developments closely and will consider appropriate regulatory cooperation on the safe and secure cross-border use of regulated stablecoins.

At the same time, MAS has been actively supporting industry-driven innovation in distributed ledger technologies. The objective is to develop strong digital asset capabilities in our financial centre, and reap efficiency benefits for our financial system. Key financial institutions have established digital asset centres of excellence and conducted market testing of the issuance of tokenised financial instruments from Singapore. This includes the use of stablecoins for programmable rewards, conditional payments and settlement of cross-border payments.

MAS is also playing a key role in collaborations among global financial institutions and international policymakers. The aim is to develop standards around tokenised assets and the supporting infrastructure to facilitate cross border interoperability across digital asset networks and instruments, including stablecoins, tokenised bank liabilities.