Regulated stablecoins offer value stability, says MAS chief Chia Der Jiun
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MAS chief Chia Der Jiun said the central bank has finalised the features of its stablecoin regulatory regime with a draft legislation being prepared.
PHOTO: SINGAPORE FINTECH FESTIVAL
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SINGAPORE - Regulated stablecoins offer the prospect of “value stability”, unlike unregulated ones that have a patchy record of keeping their peg, according to Monetary Authority of Singapore (MAS) managing director Chia Der Jiun.
Stablecoins are a type of cryptocurrency that aims to limit price volatility by pegging its value to a currency, commodity or financial instrument.
“Recurrent de-pegging can erode confidence, and trigger runs on other stablecoins,” said Mr Chia.
“We saw a similar dynamic in 2008 when money market funds that broke the buck triggered runs on other money market funds.
“Such unregulated stablecoins would not be suitable as safe settlement assets for large wholesale transactions.”
Mr Chia was speaking on Nov 13 during a keynote address at the Singapore FinTech Festival 2025.
The central bank chief noted in his speech that sound and robust regulation of stablecoins is critical to their stability.
“We have seen national regulations taking shape rapidly... But things can take a wrong turn if there is a proliferation of poorly regulated stablecoins, undermining confidence in others,” he said.
Mr Chia said MAS recognises the need to regulate stablecoins and has finalised the features of its stablecoin regulatory regime, with a draft legislation being prepared.
“Under our regime, we have given importance to sound reserve backing and redemption reliability,” he said.
“Over time, if some regulated stablecoins become systemic, regulatory frameworks will need to be strengthened further, cross-border regulatory cooperation enhanced, and access to central bank facilities considered.”
In his speech, Mr Chia also touched on tokenised assets, or what he calls “asset-backed tokens”.
He noted that while tokenisation has “lifted off the ground” with products like money market funds and cash payment services to corporate treasuries, a future where most financial assets will be tokenised, traded and settled on blockchains still requires significant progress on “several fronts”.
Tokenisation is the process of digitally representing real and physical assets such as bonds and equities on the blockchain.
Mr Chia said asset-backed tokens will need to be standardised, networks must be interoperable, and a “deep pool” of safe and reliable settlement assets will be required, along with institutional-grade infrastructure.
“Right now, banks and innovators are building their own networks and racing to scale,” he said.
“These different networks may have different technical specifications, so asset-backed tokens issued on one network may not be portable to another network, or not without friction.”
Friction would limit the benefits of transacting on chain, or worse, result in a “fragmented landscape of sub-scale walled gardens, or even a small number of monopolies posing concentration risks”.
Mr Chia added that the industry needs to develop and adopt a model of “co-opetition”, where industry players cooperate to build a marketplace for asset-backed tokens, while competing to bring products, clients and liquidity to the market.
“This means that they need to agree on common standards for asset-backed tokens even as they compete to scale,” he said.
“So that a bond token or fund token on one network is understood and accepted by participants of another network, and they need to design their networks to be open and interoperable so that asset-backed tokens issued on one network can be transacted on another.”
In 2022, MAS announced Project Guardian
The central bank introduced Global Layer One
On having a deep pool of safe and reliable settlement assets, Mr Chia said that in a tokenised environment, the concept of money is still at an early stage, and there are a few contenders for safe and reliable settlement assets.
These include central bank digital currencies (CBDCs), tokenised bank liabilities, and regulated stablecoins, he noted.
“If tokenised transactions are to scale globally, then these settlement assets must be no less robust and safe,” said Mr Chia.
“At the current stage, market participants are experimenting with different settlement assets for different use cases... Each will have to demonstrate value through utility and safety.”
Mr Chia said MAS is working with industry partners to explore the use of CBDCs, tokenised bank liabilities, and regulated stablecoins.
The Borderless, Liquid, Open, Online, Multi-currency initiative, which was launched by MAS in October, supports the industry’s experimentation with tokenised bank liabilities and regulated stablecoins for settlement, he noted.
“We welcome FIs (financial institutions), as well as clearing and settlement network operators, to conduct trials under this initiative,” said Mr Chia.
On CBDCs, Mr Chia announced that DBS Bank, OCBC Bank and UOB have successfully conducted interbank overnight lending transactions, using the first live trial issuance of Singapore-dollar wholesale CBDC for settlement.
Next, the central bank will trial the issuance of tokenised MAS bills to primary dealers and settled with CBDC.
More details on this will be announced in 2026.
“This tokenised future cannot be built by a single party – it will require collaboration between the private and public sectors, within and across jurisdictions,” said Mr Chia.
The Singapore FinTech Festival, which featured speakers such as Deputy Prime Minister Gan Kim Yong and UOB chief executive Wee Ee Cheong
