Monetary Authority of Singapore Reviewing Stablecoin Regulation Amidst Terra Collapse

Chain Debrief
August 3, 2022
10 mins read

On 1 August, a Parliamentary Question regarding Singaporean’s exposure to the collapse of $LUNA and $USD was posed.

It was submitted by Mr Saktiandi Supaat, MP, Bishan-Toa Payoh GRC, and answered by Mr. Tharman Shanmugaratnam, Senior Minister and Minister in charge of the Monetary Authority of Singapore (MAS).

Also Read: “The Nature Of Money Will Keep Changing” Says DBS CEO Piyush Gupta

Singaporean Economy Has Insignificant Exposure to Terra

The first question enquired on how affected Singaporeans were by Terra’s collapse. While MAS does not have data on “cryptocurrency holdings” by Singaporeans, they state that banks do not have significant exposure.

Earlier this year, the Luna Foundation Guard raised $1 Billion through over the counter sales of their native token, $LUNA. While Singaporean entities like Three Arrows capital were involved, local banks were not.

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MAS also notes that “spillovers to the mainstream financial system and the economy remain limited”.

While individual holders in Singapore may have been affected, crypto institutions seem isolated. Despite the ongoing contagion leading to many centralized entities failing, the wider economy is safe for now.

Further Regulations For Stables?

MAS states that they are “actively reviewing its approach to stablecoins”, which are currently categorized with other cryptocurrencies. They are considered Digital Payment Tokens (DPTs) under the Payment Services Act.

However, they are also planning to create regulations “tailored to the specific characteristics and risks of stablecoins”. This will include maintaining its peg, and the public will be able to give their input on this.

These come as part of a larger approach the MAS has for cryptocurrency, in which it states that crypto has “money laundering and terrorist financing risks”.