Singapore financial district skyline as stablecoin reserve rules move toward law

Singapore Moves to Put Full Stablecoin Reserves and a Yield Ban Into Law

By Isaac • September 1, 2026 7:17 am • Comments

Singapore is moving to turn its stablecoin framework from a policy blueprint into enforceable law, and the proposal draws a hard line around what a regulated token is supposed to be.

Under amendments proposed by the Monetary Authority of Singapore, licensed issuers would have to maintain reserve assets equal to at least 100% of their outstanding stablecoins, honor redemptions at par and refrain from paying holders interest or yield.

The package is not designed to make stablecoins behave like high-yield savings products. It is designed to make them redeemable payment instruments whose backing can withstand stress.

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CoinDesk reports that the plan would establish a dedicated stablecoin-issuance license under Singapore’s Payment Services Act. The framework would apply to single-currency stablecoins pegged to the Singapore dollar or a Group of Ten currency and issued in Singapore.

The proposal would put the reserve, redemption and conduct standards behind a specific licensing perimeter. Issuers would face direct supervision instead of relying on a framework that the central bank announced in principle in 2023.

Qualifying tokens would have to maintain par value through high-quality liquid reserves and offer timely redemption. The restriction on interest would apply to the issuer’s relationship with holders, keeping the regulated token focused on payments and settlement.

The change still has to move through Singapore’s legislative process. Until that happens, the proposal is a rulemaking step rather than a final operating license for every stablecoin in the market.

Reserves come first.

For every dollar-equivalent token in circulation, an issuer would need at least an equal amount of qualifying reserve assets. Those reserves are meant to support timely redemption even when confidence breaks and many holders head for the exit at once.

The yield restriction is just as important. When an issuer promises interest directly to token holders, the product begins to look less like digital cash and more like a deposit or investment account.

Singapore’s proposal separates those functions: the stablecoin issuer protects par value and redemption, while lending, staking and investment risk sit elsewhere.

That distinction could reduce headline returns for users, but it also makes the promise easier to understand. A regulated stablecoin should be worth what it says on the label and redeem when needed.

It should not need a risky strategy hidden behind the scenes to fund an advertised yield.

The rules are not appearing in a vacuum. StraitsX’s current token terms say XSGD and XUSD are backed by reserve assets equal to at least 100% of outstanding tokens, held in segregated trust accounts.

The company also provides for one-to-one redemption subject to onboarding, regulatory and legal requirements.

Those terms identify XSGD as pegged to the Singapore dollar and XUSD as pegged to the U.S. dollar. StraitsX says both tokens have been acknowledged by MAS as substantively compliant with the upcoming framework.

The reserve assets are held separately from the issuers’ own property for token holders. The terms also make clear that the tokens are digital payment tokens, not legal tender, and that redemption can be affected by law-enforcement actions, court orders or regulatory restrictions.

That is a useful real-world picture of how the proposed model works: full backing and par redemption, paired with compliance controls and no promise that the token is a bank deposit.

This is a stablecoin rulebook built for payments.

Singapore’s approach is particularly relevant as stablecoins move beyond crypto trading into settlement, cross-border transfers and machine-driven commerce. The more these tokens function as payment rails, the more damaging a broken redemption promise becomes.

A full-reserve rule cannot eliminate every risk. Asset quality, custody, operational controls, disclosure and the speed of redemptions still matter.

A legal requirement also has to be enforced consistently. But the proposal gives the market a clear starting point: regulated stablecoins should not create value by quietly taking risk with the backing pool.

For issuers, that may narrow the business model toward fees, distribution and payment infrastructure. For users, it may produce a simpler choice between a stable payment token and a separate yield-bearing product whose risks are disclosed on their own terms.

That clarity is the real point. Singapore is not trying to ban stablecoin innovation.

It is defining the minimum promise a licensed stablecoin must keep before innovation is built on top of it.

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