Singapore proposes tighter stablecoin rules as US and EU take divergent regulatory paths

The Monetary Authority of Singapore released a consultation on new stablecoin safeguards, while the United States and the European Union continue to follow contrasting regulatory models that affect global finance and emerging markets.

Stablecoins have surged to roughly US$320 billion in market capitalisation, prompting regulators worldwide to act. On September 1, the Monetary Authority of Singapore issued a consultation paper proposing that stablecoins seeking a "MAS-regulated" status must be fully backed by reserves, redeemable at face value, and subject to robust consumer safeguards, with the possibility of limited joint issuance with foreign partners.

The United States, through the Guiding and Establishing National Innovation for US Stablecoins Act enacted in July 2025, requires one-to-one backing with cash, bank deposits or short-term Treasuries, bans interest to holders, and clarifies that compliant stablecoins are neither securities nor commodities. The European Union follows a stricter route under its Markets in Crypto-Assets regulation, while also developing a digital euro slated for 2029, which could lower payment costs but risk bank runs if widely adopted.

Asia accounts for the bulk of stablecoin volume, especially in Indonesia, Vietnam and the Philippines, where dollar-linked tokens may accelerate real dollarisation and erode local monetary sovereignty. Despite transaction volumes of US$33-35 trillion in 2025, only about US$390 billion represented genuine payment flows, underscoring the technology's limited penetration into everyday commerce.