Comparative Analysis of Global Stablecoin Regulatory Frameworks: EU, UAE, Singapore

In recent years, with the rapid development of stablecoins globally, various countries and regions have successively introduced regulatory frameworks for stablecoins. This article will focus on analyzing the stablecoin regulatory systems of the European Union, the United Arab Emirates, and Singapore, exploring their regulatory approaches and specific measures.

1. European Union

1. Regulatory processes and normative documents

The European Union officially released the "Regulation on Markets in Crypto-Assets" on June 2023, (MiCA), establishing a unified regulatory framework for crypto assets. The rules regarding the issuance of stablecoins will take effect on June 30, 2024.

2. Regulatory authorities

The European Banking Authority ( EBA ) and the European Securities and Markets Authority ( ESMA ) are responsible for establishing the regulatory framework and overseeing significant stablecoin issuers. The competent authorities of each member state also have some regulatory powers.

3. Main Content of the Regulatory Framework

(1) Definition of stablecoin

MiCA divides stablecoins into two categories:

• Electronic currency token ( EMT ): A type of cryptocurrency asset that stabilizes its value by referencing only one official currency.
• Asset Reference Token ( ART ): A cryptocurrency asset that stabilizes value by referencing a combination of various official currencies or other assets.

Algorithmic stablecoins are effectively equivalent to being banned as they are not included in the regulatory framework.

(2) Issuer's access threshold

ART issuers must obtain authorization from the competent authority or meet the requirements of specific credit institutions. For small-scale ART or those targeting specific investors, issuers may be exempt from qualification requirements but must still submit a white paper.

EMT issuers are limited to certified electronic money institutions or credit institutions.

(3) stablecoin value stability mechanism and reserve assets maintenance

• The issuer must maintain sufficient reserve assets to cover risks and meet redemption demands.
• Reserve assets must be isolated from the issuer's own assets and held in custody by a third party.
• Reserve asset investments are limited to low-risk, high-liquidity financial instruments.

(4) Compliance requirements for circulation links

• Holders have the right to redeem ART at any time.
• There is a limit on the maximum circulation of ART.
• Important ART must undertake additional obligations, such as liquidity stress testing, etc.

2. United Arab Emirates

1. Regulatory processes and normative documents

In June 2024, the Central Bank of the UAE issued the "Payment Token Service Regulations", clarifying the definition and regulatory framework for stablecoins.

2. Regulatory authorities

The UAE adopts a "federal-emirate" dual-track parallel regulatory system. The Central Bank is responsible for regulation at the federal level, but does not include the two financial free zones of DIFC and ADGM.

3. Main Content of Regulatory Framework

(1) Definition of stablecoin

The regulations define stablecoins as "virtual assets that aim to maintain a stable value by referencing the value of a fiat currency or another stablecoin denominated in the same currency."

(2) Issuer's entry threshold

Applicants must meet legal form requirements, initial capital requirements, and submit necessary documents.

(3) stablecoin value stabilization mechanism and reserve asset maintenance

• Issuers must establish an effective system to manage reserve assets.
• Reserve assets must be stored in a separate custody account.
• The value of reserve assets must not be less than the total face value of the legal currency of the stablecoins in circulation.
• A monthly third-party audit is required.

(4) Compliance requirements for circulation links

• Prohibition of paying interest or other benefits.
• Holders can redeem stablecoins at any time.
• Issuers must comply with anti-money laundering and anti-terrorism financing regulations.
• A user data protection policy needs to be established.

3. Singapore

1. Regulatory processes and normative documents

In 2019, the "Payment Services Law" was introduced, and in August 2023, the "Stablecoin Regulatory Framework" was released.

2. Regulatory authorities

The Monetary Authority of Singapore ( MAS ) is responsible for regulation.

3. Main content of the regulatory framework

(1) Definition of stablecoin

Only standardize single-coin stablecoins issued in Singapore that are pegged to the Singapore dollar or G10 currencies.

(2) Issuer's access threshold

Must meet basic capital requirements, business restrictions, and solvency requirements.

(3) stablecoin value stabilization mechanism and reserve assets maintenance

• Reserve assets are limited to low-risk, high-liquidity assets.
• Strict separation of own funds and reserve assets is required.
• The market value of reserve assets must be higher than the circulation scale of stablecoins.

(4) Compliance requirements in the circulation link

The issuer must redeem the holder's stablecoin at face value within 5 working days.