Singapore proposes 100% reserve backing and yield ban for stablecoin issuers

Singapore’s financial authorities have put forward draft rules that would require stablecoin issuers to hold reserves equal to 100% of outstanding tokens and prohibit those issuers from passing any yield on those reserves to token holders. The proposals, if adopted, would draw a hard regulatory line between stablecoins and yield-bearing instruments, signalling that the Monetary Authority of Singapore intends to treat stablecoins as a narrow payment tool rather than an investment product.

The yield prohibition is the sharper edge of the two measures. Many issuers currently generate revenue by investing reserve assets and, in some structures, share a portion of that return with distributors or holders. A blanket ban would force a fundamental rethink of those commercial models, compressing the economics for issuers operating in or through Singapore.

For the broader tokenisation market, the 100% reserve requirement is consequential because stablecoins function as the settlement layer for most on-chain asset transactions. Constraining how reserves can be structured and deployed limits the range of assets that could serve as backing, which in turn affects how issuers manage liquidity and counterparty exposure. Operators building settlement or collateral workflows around Singapore-domiciled stablecoins will need to assess whether current assumptions about reserve composition remain viable under the proposed framework.