A "currency revolution" has sounded the horn! Bank of America, Singapore's central bank, and Hong Kong's Li Jiachao's important "stable currency" policies are coming

The market environment for legal tender is gradually declining, and countries are actively promoting central bank digital currencies (CBDCs), but the global clarion call for decentralized finance (DeFi) has increased the urgency of regulation. The Monetary Authority of Singapore (MAS) announced that it has finalized the regulatory framework for stablecoins, and issuers must meet multiple requirements such as disclosure. Hong Kong Chief Executive John Lee said that he attaches importance to the development of Web3 and is fully exploring stablecoin regulatory arrangements. Bank of America expects that the PYUSD dollar stablecoin launched by payment giant PayPal will be widely adopted.

Monetary Authority of Singapore: Stablecoin regulatory framework has been finalized

The Monetary Authority of Singapore (MAS) announced on its official website that it has finalized the regulatory framework for stablecoins, which will apply to single-currency stablecoins (SCS) pegged to the Singapore dollar or any G10 currency. The issuers of such SCS must meet a number of key requirements, the first of which is value stability. SCS reserve assets will be subject to requirements in terms of their composition, valuation, custody and auditing to ensure a high degree of value stability.

(Source: MAS)

Next is capital. Issuers must maintain minimum base capital and liquid assets to reduce the risk of bankruptcy and, if necessary, wind down their operations in an orderly manner. Next is redemption at par. Issuers must return the par value of SCS to holders within five business days of a redemption request.

Finally, the most important disclosure is that the issuer must provide appropriate disclosure to users, including information about the SCS value stabilization mechanism, the rights of SCS holders, and the results of the reserve asset audit.

Only stablecoin issuers that meet all the requirements under the framework can apply to the Monetary Authority of Singapore for their stablecoins to be recognized and labeled as "MAS-regulated stablecoins". This label will enable users to easily distinguish MAS-regulated stablecoins from other digital payment tokens. Anyone who misrepresents a token as a "MAS-regulated stablecoin" may be penalized under MAS's stablecoin regulatory framework and be included in MAS's investor alert list.

“If users choose to trade stablecoins that are not regulated under the MAS framework, they should make an informed decision about the attendant risks,” the MAS concluded.

Hong Kong's Li Jiachao: Attach importance to the development of Web3 and are fully exploring the regulatory arrangements for stablecoins

Lee Ka-chiu attended the Innovation Technology and Art Development Summit Forum hosted by Bauhinia Magazine via video on Tuesday (August 15). He said that Web 3.0 is a new development direction for the Internet. It integrates technologies that have received widespread attention in recent years and has the potential to become a trend in promoting the future development of finance and commerce.

“We value the development of FinTech and Web 3.0, and have issued a policy statement that makes it clear that Hong Kong is open and inclusive to innovators around the world engaged in virtual asset business. The Government will work with financial regulators to create a conducive environment to promote the sustainable and responsible development of Hong Kong’s financial industry,” he continued.

Lee also pointed out that in June this year, a new licensing system for virtual asset trading platforms had been implemented, and the regulatory arrangements for stablecoins were being explored. The government is also closely monitoring international developments to ensure that Hong Kong's regulatory requirements are sound and facilitate market development.

Bank of America: US dollar stablecoins will be widely adopted

Bank of America released a global digital asset strategy report last week, outlining its views on PayPal's dollar stablecoin PYUSD. The report was written by Alkesh Shah, head of global cryptocurrency and digital asset strategy at Bank of America Global Research, and Andrew Moss, the bank's global digital asset strategist.

According to PayPal, the PYUSD stablecoin will be compatible with selected third-party digital asset wallets and backed by traditional assets, including U.S. dollars, short-term Treasury bills and cash equivalents. Bank of America noted that PayPal, which has 435 million users, is the first global company to "launch a stablecoin with regulatory approval."

The bank's analysis stated: "We expect the launch of the PYUSD dollar stablecoin to improve payment efficiency and improve customer experience over time, but given the lack of wallet compatibility, exchange trading pairs or new features, PYUSD's adoption is unlikely to be significant in the short term."

Bank of America continued: “Over the long term, we expect PYUSD to face more resistance to adoption as competition from central bank digital currencies and yielding stablecoins increases. When interest rates are close to zero, investors may be fine holding non-yielding stablecoins like USDT and USDC, but with short-term rates above 5%, yielding stablecoins may become increasingly available and attractive.”

Regarding cryptocurrency regulation, Bank of America emphasized: “Given that the issuance of stablecoins does not change the systemic risks of traditional markets, we do not expect the launch of PYUSD to accelerate regulatory clarity, but stablecoins may face regulatory resistance if non-banks are ultimately prohibited from issuing stablecoins.”