Today the Monetary Authority of Singapore (MAS) announced its digital money plans focused on regulated stablecoins, tokenized deposits and central bank digital currencies (CBDCs). It doesn’t expect its stablecoin regulations to come into force for a year. Hence, in the meantime, it is giving the go ahead to subsidiaries of StraitsX and Paxos to issue stablecoins. However, we believe they will look different from stablecoins as we know them today. They might be available on multiple public blockchains, but final settlement is likely to happen on a privately controlled chain.
The clues are in a new MAS paper on Project Orchid setting out its vision. It will apply to regulated stablecoins, tokenized deposits and central bank digital currency (CBDC). Tokenized deposits and regulated stablecoins have to settle on “Orchid compatible ledgers” (OCLs).
An OCL ledger operator must comply with all legal and regulatory requirements relevant to its conduct. In other words digital currency has to settle on a ledger under the control of a defined operator. That makes sense for banks but differs from how stablecoins operate today.
Here’s the major clue: “Permissionless networks whereby anyone may view, edit, and conduct any activities, including deploying smart contracts without controls or oversight are unlikely to meet the requirements of qualification as an OCL (ledger).”
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