CBDCs are slowly touching the market. Which means in near future most of the private stablecoins would be getting ditched and that would start from the Tether then slowly other stablecoins would be touched. And this means stablecoins have very difficult future now.
In Singapore they have already noticed this and have started only allowing the stablecoins which are legally pegged to the national currency. Like say USDT would be accepted but say someone like Terra Luna stablecoin won't be released under legal way in their soil.
In short they are making sure that the new regulation would be applied to exchanges, wallets, dApps and the user consumable places where the stablecoins which are approved by the MAS would be allowed and everything else would remain illegal.
Let's talk about how Singapore is planning on bringing these regulations and the rules through framework on stablecoins.
Monetary Authority of Singapore and Crypto
Just like USA has the SEC that does the work against the crimes of currency, business, international trade and the regulations. There is an entity in the Singapore that does the work on the similar norms called Monetary authority of Singapore. This organization has laid our variety of the rules for forex and even for crypto.
Crypto is a bit complex and considering singapore is a heaven for many business and the crypto startups, there are regulations. And they are trying to comply with the international rules and also the IMF regulations too. So they tend to have added more rules and the regulations norms for the business and the consumers here.
Regulatory Framework for Singapore
Stablecoins are tricky. They appear pegged to the national currency. And they are kind of being the twin of the legal tender but they are not. Just being the digital currency is not enough, it has to also be falling in terms of the legal tender and also it has to be approved by the nations who are in process of releasing the CBDC.
In short it is a process of ditching the stablecoins which means out of Tether, USDC and others there is going to be either one winner or all going to be losers in a period of time. Which kind of makes you feel that this would lead to more or less crimes and scams which govt has to look over as well. This is what would happen all over the world.
Global Risk of Stablecoins and Illegal Activities
USDT recently was freezed by the govt which was used in the acts like the human trafficking. And there are variety of scams where the bitcoin, ethereum and the USDT was being used for the illegal activity. And it kind of makes you understand how the stablecoins can pose a threat.
This is what the Singapore has already seen even with money laundering cases. And they have pretty much experienced variety of those financial and legal issues over a period of time. Which goes to show that stablecoins and the illegal activities need to be handled and controled so Monetary Authority of Singapore has to pull the plug.
If this continues the CBDCs would be the only stablecoin that would be traded in the Singapore market and there would easy to spot forex and the cross border transactions without having to worry about crimes.
Singapore being one of the leaders in the cross border transactions and the crypto hub of the world, we are going to see some strong regulations in near future. Monetary authority of the Singapore would bringing the consumers, business and exchange under their regulatory framework.