Detailed Explanation of the Regulatory Frameworks for the Three Major Stablecoins: EU, UAE, and Singapore

This article will analyze in detail the stablecoin regulatory framework in the EU, UAE, and Singapore from the perspectives of regulatory processes, normative 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) on June 2023, aiming to establish a unified regulatory framework for crypto assets. The rules regarding the issuance of stablecoins in the MiCA have officially come into 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 a regulatory framework and supervising significant stablecoin issuers and service providers. National competent authorities also possess 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 cryptographic asset that stabilizes its value by referencing only one official currency.
• Asset Reference Token ( ART ): A cryptocurrency that stabilizes value by referencing a combination of the values of one or more official currencies.

Algorithmic stablecoins are not regulated under the MiCA framework and are effectively banned.

(# b. Issuer access threshold

There are two types of ART issuers:

1. Obtaining authorization from the competent authorities of member states as a legal entity or enterprise 2### credit institutions that meet specific conditions

MiCA adopts a tiered regulatory approach for ART of different scales:

• Small-scale ART) circulation value <500 million euros ) can be exempted from issuer qualification requirements, but a white paper must be submitted.
• Medium-sized ART must meet the issuer qualification requirements.
• Large-scale ART( circulation value > 100 million euros ) must bear additional reporting obligations

All ART issuers must meet the minimum capital requirements.

(# c. Stablecoin value stabilization mechanism and reserve asset maintenance

• ART issuers must maintain sufficient reserve assets to cover risks and meet redemption demands.
• Reserve assets must be isolated from the issuer's assets and held in custody by a third party.
• Reserve asset investments must meet requirements such as low risk and high liquidity.

)# d. Compliance requirements for circulation links

• ART holders have the right to redeem at any time.
• Set a limit on the maximum circulation of ART
• Important ARTs need to take on additional responsibilities, such as liquidity management, stress testing, etc.

The regulations related to EMT are stricter than those for ART.

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2. United Arab Emirates

( 1. Regulatory Process and Normative Documents

In June 2024, the Central Bank of the UAE issued the "Payment Token Services Regulation," which clarifies the definition and regulatory framework for stablecoins.

) 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.
• The DIFC and ADGM financial free zones have independent regulatory systems.

3. Core content of the regulatory framework

a. Definition of stablecoin

The regulation uses the concept of "payment tokens", defined as "virtual assets designed to maintain stable value by referencing the value of a fiat currency or another stablecoin priced in the same currency".

b. Issuer access threshold

The issuer must meet legal form requirements, initial capital requirements, and submit necessary information and documents.

c. Stablecoin value stabilization mechanism and reserve asset maintenance

• Issuers need to establish an effective system to manage reserve assets
• Reserve assets must be stored in a separate custody account.
• The value of reserve assets must be at least equal to the fiat value of the circulating stablecoins.
• Monthly external audit is required.

d. Compliance requirements in the circulation link

• Interest-bearing stablecoins are not allowed
• Allow holders to redeem freely
• Issuers must comply with anti-money laundering/anti-terrorism financing regulations.
• Allow limited disclosure of user personal data

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3. Singapore

( 1. Regulatory processes and regulatory documents

• 2019: The Payment Services Act was introduced.
• August 2023: Official release of the "stablecoin regulatory framework"

) 2. Regulatory authorities

The Monetary Authority of Singapore ### MAS ### is responsible for regulation.

( 3. Core 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. Issuer Access Threshold

Applying for MAS license requires:

• Basic capital requirements
• Business restriction requirements
• Solvency requirements

c. Stablecoin value stabilization mechanism and reserve asset maintenance

• Reserve assets are limited to low-risk, high-liquidity assets.
• A fund needs to be established and an isolated account opened.
• The market value of reserve assets must be higher than the circulation scale of stablecoin.

d. Compliance requirements for circulation links

The stablecoin issuer is required to fulfill the statutory redemption obligation and redeem at face value within 5 working days.

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