"""

Singapore prepares new framework against stablecoin yields

The Monetary Authority of Singapore (MAS) is considering new regulatory proposals for the stablecoin market that would ban issuers from offering interest or similar returns to investors. The proposal would amend the Payment Services Act to ensure stablecoins are used as a means of payment rather than as a savings product.

Under the draft, issuers would be required to maintain at least 100% backing at all times for all tokens in circulation. These assets would also have to be held in accounts separate from the companies’ own funds. The aim is to protect user assets and strengthen price stability.

Key points in the proposed rules

  • Banning stablecoin issuers from providing customers with interest, yield or similar economic benefits
  • Requiring at least 100% reserves for all tokens in circulation
  • Holding reserve assets in accounts separate from the issuer’s own funds

In its consultation paper, MAS stresses that stablecoins should not be used by the public as investment products. According to the regulator, these assets should be used for payments rather than as instruments that generate bank-deposit-like returns.

In step with global regulation and banking concerns

Singapore’s approach also mirrors other major regulatory regimes. The GENIUS Act in the U.S. and the European Union’s MiCA regulation also close the door on paying interest or yield to stablecoin investors.

On the banking side, a cautious stance toward stablecoin yields stands out. Banks such as JPMorgan Chase have lobbied against such payments, arguing they could compete with retail banking activities and hurt deposit bases.

What does this mean for the market?

The new framework could put pressure on business models that use stablecoins as a source of passive income. On the other hand, rules such as reserve requirements and fund segregation are expected to improve confidence in stablecoins used for payments.

Consultation timeline and key assets

The consultation launched by MAS is set to end on 16 October this year. No implementation date has yet been announced for when the proposed stablecoin yield ban would take effect.

The market’s two largest stablecoins are Tether’s USDT and Circle’s USDC. Meanwhile, shares of Circle Internet Group are down 25% over the past 12 months and were trading at $90.06, suggesting investors are closely watching regulatory developments.

"""