Singapore’s central bank has launched a consultation on the country’s prudential treatment for cryptoassets, proposing a more tailored approach that doesn’t treat all cryptoassets as equally risky. Instead, certain tokenized assets, stablecoins, and permissionless cryptoassets may now qualify for a more lenient approach than the one suggested in last year’s consultation.
The Monetary Authority of Singapore (MAS) consultation proposed that “tokenized traditional assets” and certain non-algorithmic stablecoins would fall into a lower-risk category with lighter capital treatment, known as “Group 1 prudential treatment,” as opposed to the more severe “Group 2 prudential treatment.”
Certain “permissionless cryptoasset”—public blockchains open to anyone as opposed to “permissioned blockchains” which restrict access to authorized users—could also fall into this category, if it could be demonstrated that appropriate safeguards have adequately mitigated the associated risks. These risks include those related to governance, technology, settlement finality, and anti-money laundering/countering the financing of terrorism (AML/CFT).
Referencing the feedback to its previous consultation from March 2025, the central bank said: “MAS has carefully considered the feedback and agrees with respondents that permissionless cryptoassets should not be ruled out from being treated as Group 1 cryptoassets if the relevant risks have been addressed.”
However, MAS also proposed exposure and issuance caps to ensure that the risks arising from permissionless cryptoassets that are classified as Group 1 are contained during the interim period. Thus, until the rules for cryptoassets are finalized, “exposure and issuance caps for both locally incorporated banks and bank branches in Singapore will apply.”
For local banks, this means exposure to permissionless cryptoassets classified as Group 1 is capped at 2% of the bank’s Tier 1 capital, while issuances of Group 1 permissionless cryptoassets that result in liabilities for the bank are capped at equivalent to 5% of the bank’s Tier 1 capital.
Meanwhile, for international banks with a branch in Singapore, exposures to Group 1 permissionless cryptoassets booked in the Singapore branch are capped at 0.2% of the branch’s total assets, and issuances are capped at 1% of the branch’s total assets.
MAS also clarified that “to avoid doubt, the proposed exposure and issuance caps are not intended to limit banks’ holdings and issuances of permissionless cryptoassets but are instead intended to limit the amount of permissionless cryptoassets that are eligible to be treated as Group 1 cryptoassets.”
The consultation’s reconsideration of how certain cryptoassets are classified and treated under Singapore’s regulatory framework suggests that MAS is listening to feedback with regard to its regulatory approach, and is willing to provide a more tailored, asset-dependent interpretation of prudential standards.
If adopted, it could give banks more confidence to engage with permissionless cryptoassets, stablecoins, and tokenized assets going forward, which would be good news for a jurisdiction that has been ranked amongst the world’s most “crypto-obsessed” countries.
A report published last October by ApeX Protocol—which scored countries according to growth in adoption over recent years, the share of the population that owns digital assets, internet search activity, and the availability of digital currency ATMs—gave Singapore a perfect score of 100, with an ownership rate of 24.4% as of 2024, the second highest globally. The country also ranked first for internet search activity, with over 120,000 searches, or 2,000 searches for every 100,000 residents.
According to the MAS announcement, market participants and interested parties have until May 18, 2026, to give feedback on the new consultation’s proposals.
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Source: https://coingeek.com/singapore-proposes-lower-risk-rules-for-some-digital-assets/
