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On August 15, the Monetary Authority of Singapore (MAS) announced the features of the new regulatory framework governing stablecoins and their issuers in the country. This takes into account feedback received for the public consultation in October 2022 on the proposed regulation of stable cocci.
As part of the announcement, the regulator also released its responses to the initial consultation detailing MAS’ rationale for the new rules.
According to the regulator, stablecoins are designed to maintain a fixed value relative to fiat currencies and when well regulated to preserve such value stability, they can serve as a reliable medium of exchange for the cryptoasset ecosystem.
Therefore, its stablecoin regulatory framework will apply to single currency stablecoins (SCS) issued in Singapore that are pegged to the Singapore dollar or any G10 currency, as those currencies have high-quality liquid assets available to support the SCS.
Not all stablecoin issuers will be able to meet these requirements, and only those who can will be able to apply to MAS to have their stablecoins recognized and labeled as “MAS Regulated Stablecoins”.
This allows users to easily identify MAS-regulated stablecoins from other crypto-assets and perform an appropriate risk assessment when choosing to deal with unregulated stablecoins, which may not provide the same value stability protection as MAS-regulated ones.
The United Kingdom sets expectations regarding compliance with the Travel Rules
The UK’s Financial Conduct Authority (FCA) has published a notice of compliance with the Travel Rule by cryptoasset companies, which will be required to collect, verify and share information on cryptoasset transfers (also known as the Travel Rule) by September 1 .
In the notice, the FCA set out its expectations for firms, which include:
- taking all reasonable steps to comply with the Travel Rules;
- remain responsible for such compliance even when using third party suppliers;
- full compliance when sending or receiving transfers of cryptoassets to a UK firm or any jurisdiction that has implemented the Travel Rule; and
- regular reviews of the implementation status of Travel Rules in other jurisdictions and adaptation of business processes as necessary.
SEC to appeal Ripple’s decision
The US Securities and Exchange Commission (SEC) has sought permission to appeal a federal judge’s ruling that the sale of Ripple tokens (XRP) through exchanges did not violate securities law, a day after it allowed the filing.
The SEC is specifically appealing the judge’s ruling that programmatic sales of XRP did not violate securities law because retail investors buying assets on an exchange would not have the same expectations as an institutional investor buying tokens directly from Ripple. In its filing, the SEC said its argument focused on the sale of XRP, not the asset itself.
FDIC highlights crypto risks for banks in annual risk report
The US Federal Deposit Insurance Corporation (FDIC) released its annual risk report on August 14, which includes cryptoassets as one of five broad categories considered top priorities this year.
According to the FDIC, cryptoassets pose “new and complex” risks to the US banking system that are “difficult to assess”. Key risks include fraud, legal uncertainties, misleading or inaccurate representations and disclosures, risk management practices that demonstrate a “lack of maturity and robustness,” and platform and business vulnerabilities.
It also identifies the risk of contagion within the industry due to the interconnectedness of certain market participants, which in turn poses a risk to banks exposed to the sector, as demonstrated by Silicon Valley Bank and Signature Bank. Notably, the FDIC singles out stablecoins and their susceptibility to “risk exposure.”
Therefore, the FDIC will continue to closely monitor banks’ crypto-asset exposures and has also developed processes to engage in “robust supervisory discussions with them regarding proposed and existing crypto-asset activities.
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