The Monetary Authority of Singapore (MAS) has granted in-principle approval under the Payment Services Act (PSA) to three entities that will issue stablecoins that will comply with the central bank’s upcoming stablecoin regulatory framework. 

The three entities are StraitsX SGD Issuance, StraitsX USD Issuance and Paxos Digital Singapore (for a US dollar-backed stablecoin). 

These are the entities that can already demonstrate compliance with the MAS’s upcoming regulatory framework, says MAS managing director Ravi Menon in his Singapore Fintech Festival (SFF) annual address. Once the legislative amendments take effect, these stablecoins will be regarded as “MAS-regulated stablecoins”.

If well-regulated, stablecoins can potentially play a useful role as digital money, alongside Central Bank Digital Currencies (CBDCs) and tokenised assets. “It is able to help spur innovative use cases. One example is in purpose bound money (PBM), showcased through Project Orchid. 

“StraitsX is trialing XSGD-backed PBM to facilitate escrow arrangements in e-commerce transactions. This ensures that funds are released to merchants only when the customer receives the purchased items, providing greater assurance to both parties. This has been tested at SFF in partnership with Amazon and Grab,” says Menon. 

Meanwhile, Menon also notes that the MAS has conducted many experiments with other central banks and financial industry players since 2016 to explore the use of wholesale CBDCs on distributed ledgers to facilitate real-time cross border payments and settlements. 

See also: SFF 2023 spurs discussion on generative AI and the future of finance

The central bank will take its experiments one step further next year as it plans to pilot the live issuance of wholesale CBDCs to instantaneously settle payments across commercial banks. Previously, the MAS had only stimulated the issuance of wholesale CBDCs within test environments. The regulator will partner with local banks to pilot the use of wholesale CBDCs as a common settlement asset in domestic payments. 

Retail customers will be able to use tokenised bank liabilities within transactions with merchants, who can in turn credit these tokenised bank liabilities with their respective banks. The outstanding interbank obligations arising from these transactions will be settled via an automatic transfer of wholesale CBDCs to the bank — as such, the clearing and settlement occurs in a single step on the same infrastructure, unlike the current system, Menon explains.

Separately, Menon also announces the next phase of Project Greenprint, which aims to harness technology and data to enable a more transparent, trusted and efficient environmental, social and governance (ESG) ecosystem to enable green and sustainable finance. To streamline the connection, access and use of ESG data, the MAS has launched a new integrated platform 

See also: MAS launches blueprint outlining technology infrastructure required to facilitate digital money transactions

The platform, which aims to unify and synergise current pilots occurring under Project Greenprint, is driven by a new entity dubbed Greenprint Technologies. The entity is supported by MAS together with HSBC, KPMG, MUFG and Microsoft. 

SFF2023 will be the last edition attended by Menon in his current capacity pending his retirement in January 2024. In his conclusion notes, Menon highlights that fintech must have a larger purpose in mind.

“Yes, there is money to be made, costs to be cut and opportunities to be seized. But fintech is more importantly about solving real world problems; improving people's lives; promoting a more inclusive society; and about securing a sustainable planet for our future. This sense of higher purpose has permeated SFF since 2016. It is why people come back year after year to the festival to build a better world,” he adds. 


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