Comparison of Global Stablecoin Regulatory Frameworks: EU, UAE, and Singapore

In recent years, with the rapid development of stablecoins in the cryptocurrency market, major global financial centers have introduced relevant regulatory frameworks. This article will provide a detailed comparison and analysis of the stablecoin regulatory policies in the EU, UAE, and Singapore.

I. European Union

1. Regulatory process and normative documents

The European Union officially released the "Markets in Crypto-Assets Regulation" (MiCA) in June 2023, aiming to establish a unified regulatory framework for crypto assets. The rules regarding the issuance of stablecoins have 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 the regulatory framework and overseeing significant stablecoin issuers. The competent authorities of member states also possess certain regulatory powers.

3. Main Content of the Regulatory Framework

a. Definition of stablecoin

MiCA divides stablecoins into two categories:

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

Algorithmic stablecoins do not fall under the definition of EMT or ART as defined by MiCA and are effectively prohibited.

b. Issuer access threshold

The issuer of ART can be an authorized legal entity or enterprise, or it can be a qualified credit institution.

For ART with an average circulation value of less than 5 million euros or aimed only at qualified investors, issuers may exempt qualification requirements, but must still draft a white paper and notify the competent authority.

Issuers of ART with an average circulation value exceeding 100 million euros are required to undertake additional reporting obligations.

All ART issuers must meet the minimum equity requirements.

c. Stablecoin value stabilization mechanism and reserve asset maintenance

The issuer of ART must always maintain reserve assets to cover relevant risks and meet the redemption needs of holders. The reserve assets must be isolated from the issuer's assets and held by a third party. The investment in reserve assets must meet conditions such as low risk and high liquidity.

d. Compliance requirements for circulation links

ART holders have the right to redeem tokens from the issuer at any time. The issuer must establish redemption policy rules.

MiCA has set a limit on the maximum circulation of ART. If the limit is exceeded, issuance must be halted and a plan submitted.

e. Important special rules for ART

ART that meets specific criteria is classified as "important ART", and its issuers are required to undertake additional obligations, such as implementing specific compensation policies, assessing liquidity needs, conducting stress tests, etc.

2. UAE

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 dual-track parallel regulatory system of "federal-emirate". The Central Bank of the UAE is responsible for regulation at the federal level, but 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 that aims to maintain a stable value by referencing the value of a fiat currency or another stablecoin denominated in the same currency."

b. Issuer admission threshold

Stablecoin issuers must meet legal form requirements, initial capital requirements, and provide necessary information and documentation.

c. Stablecoin value stabilization mechanism and reserve assets maintenance

The issuer must establish systems to protect and manage reserve assets, ensuring their independence and security. The value of reserve assets must be at least equal to the total face value of the fiat currency of the stablecoins in circulation. The issuer is required to conduct monthly external audits.

d. Compliance requirements for circulation links

Stablecoins can only be used as payment instruments and may not pay interest. Holders may redeem stablecoins at any time. Issuers must comply with anti-money laundering and personal information protection regulations.

3. Singapore

1. Regulatory process and normative documents

In 2019, Singapore introduced the Payment Services Act. In August 2023, the Monetary Authority of Singapore ( MAS ) released the Stablecoin Regulatory Framework, applicable to single-currency stablecoins pegged to the Singapore dollar or G10 currencies.

2. Regulatory authorities

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

3. Main Content of Regulatory Framework

a. Definition of stablecoin

The "Payment Services Act" defines "payment tokens" ( stablecoin ). The "Stablecoin Regulatory Framework" further narrows the scope of regulation to single-currency stablecoins pegged to the Singapore dollar or G10 currencies.

b. Issuer access threshold

Stablecoin issuers must meet basic capital requirements, business restriction requirements, and solvency requirements.

c. Stablecoin value stabilization mechanism and reserve asset maintenance

Reserve assets are limited to cash, cash equivalents, and short-term high-rated bonds. The issuer must establish a fund and open a segregated account to strictly separate its own funds from reserve assets. The market value of reserve assets must exceed the circulation scale of the stablecoin.

d. Compliance requirements for circulation links

The issuer must assume the legal redemption obligation and redeem the holder's stablecoin at face value within 5 working days.