Comparative Analysis of Stablecoin Regulatory Frameworks in Major Global Regions

This article will provide a detailed analysis and comparison of the stablecoin regulatory frameworks in the EU, UAE, and Singapore from the perspectives of regulatory processes, regulatory documents, regulatory authorities, and the core content of the regulatory framework.

1. European Union

1. Regulatory processes and regulatory documents

The European Union officially released the "Regulation on Markets in Crypto-Assets" (MiCA) in June 2023, aiming to establish a unified regulatory framework for crypto assets. The relevant rules regarding the issuance of stablecoins will officially 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 regulatory frameworks and supervising significant stablecoin issuers and related service providers. The competent authorities of the member states where stablecoin issuers are located also have some regulatory powers.

3. Main Content of the Regulatory Framework

a. Definition of stablecoin

The MiCA legislation divides stablecoins into two categories:

• Electronic Currency Token ( EMT ): A type of crypto asset that stabilizes its value by referencing only one official currency.
• Asset reference token ( ART ): A crypto asset that stabilizes value by referencing a combination of one or more official currency values.

The MiCA legislation does not include algorithmic stablecoins in its regulatory framework.

b. Access threshold for issuers

There are two types of ART issuers:

1. Obtaining authorization from the competent authorities of member states for legal entities or enterprises.
2. Credit institutions that meet specific conditions

The MiCA legislation adopts a "layered regulatory" model for ART, setting different regulatory requirements based on average circulation value.

c. Stablecoin value stabilization mechanism and maintenance of reserve assets

• ART issuers must always maintain reserve assets to cover risks and meet liquidity needs.
• Reserve assets must be isolated from the issuer's own assets and held in independent custody by a third party.
• Investment in reserve assets is restricted to low-risk, highly liquid financial instruments.

d. Compliance requirements in the circulation link

• ART holders have permanent redemption rights
• Set a limit on the maximum circulation of ART
• Important ART must undertake additional obligations, such as liquidity management and stress testing.

2. United Arab Emirates

1. Regulatory process and normative documents

In June 2024, the Central Bank of the UAE issued the "Payment Token Service Regulations", which clarified the definition and regulatory framework of "payment tokens" ( stablecoin ).

2. Regulatory authorities

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

3. Main content of the regulatory framework

a. Definition of stablecoin

The regulation defines stablecoin as "a virtual asset designed to maintain a stable value by referencing the value of a fiat currency or another stablecoin denominated in the same currency."

b. Issuer's access threshold

The applicant must be a legal entity established in the UAE and must obtain permission or registration from the Central Bank of the UAE.

c. Mechanism for stabilizing coin value and maintaining reserve assets

• The issuer must establish an effective system to protect and manage reserve assets.
• Reserve assets must be held in cash in an independent custody account.
• The value of reserve assets must be at least equal to the total face value of the fiat currency of the circulating stablecoins.
• Require monthly external audit

d. Compliance requirements in the circulation phase

• Interest-bearing stablecoins are not allowed
• Holders can redeem stablecoins at any time without restrictions.
• Issuers must comply with anti-money laundering/anti-terrorism financing regulations
• There are specific requirements for the protection of users' personal data.

3. Singapore

1. Regulatory processes and regulatory documents

• The "Payment Services Act" was introduced in December 2019.
• Released the "Stablecoin Regulatory Framework" in August 2023

2. Regulatory authorities

The Monetary Authority of Singapore ( MAS ) is responsible for regulation, issuing licenses, and conducting compliance supervision.

3. Main Content of the Regulatory Framework

a. Definition of stablecoin

The "Stablecoin Regulatory Framework" only regulates single-currency stablecoins issued in Singapore that are pegged to the Singapore Dollar or G10 currencies.

b. Access thresholds for issuers

• Minimum capital requirement: not less than 50% of annual operating expenses or 1 million SGD
• Business restriction requirements: No trading, asset management or other businesses are allowed.
• Solvency requirements: Meet the normal withdrawal needs of assets or exceed 50% of annual operating expenses.

c. Stability mechanism of the coin value and maintenance of reserve assets

• Reserve assets are limited to specific low-risk, high-liquidity assets.
• Require the establishment of a fund and the opening of a segregated account to separate proprietary funds from reserve assets.
• The market value of reserve assets must be higher than the circulation scale of stablecoins.

d. Compliance requirements in the circulation link

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