In its Consultation Paper published on 23 December 2019, the Monetary Authority of Singapore (MAS) invites the public to comment on the regulatory framework for e-money and digital payment tokens (DPTs) under the Payment Services Act 2019 (PS Act), considering the emergence of stablecoins.

Under the PS Act, e-money is a digital representation of a single fiat currency which represents a claim on its issuer.  On the other hand, although DPTs (such as Bitcoin and Ether) are payment instruments, their value is without reference to any fiat currency and they do not represent a claim on any issuer.  E-money constitutes “money” under the PS Act, but DPTs do not.

A stablecoin is a new class of cryptocurrency that maintains a stable value relative to one or more assets, such as a fiat currency or a commodity.  While a stablecoin is like a DPT in that it is also a cryptocurrency, its stability may allow it to perform all the functions of money, similar to e-money.  This could present a challenge to the distinction made by the PS Act between e-money and DPTs.

MAS therefore seeks the public’s views on the following issues, among others:

• whether the scope and definition of e-money and DPTs under the PS Act are still relevant and appropriate in view of the emergence of stablecoins; and
• whether the regulatory framework for DPTs is suitable for and effective in protecting stablecoin holders.

Comments on the consultation paper must be submitted by 28 January 2020.

For More Information

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Disclaimer: This article is for general information only and does not constitute legal advice.

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