Singapore Delays Crypto Banking Rules to 2027

The Monetary Authority of Singapore has deferred the rollout of new crypto prudential standards from January 1, 2026, to the start of 2027, marking a significant shift in the regulatory timeline following extensive industry consultation. The delay comes after financial institutions and crypto companies raised substantial concerns about the proposed framework’s timing and treatment of blockchain assets. Industry participants argued that Singapore’s initial plan to adopt the measures in 2026 would make it one of the first jurisdictions to implement the Basel Committee on Banking Supervision’s cryptoasset framework, potentially exposing local banks to competitive disadvantages in the global market.

Among the prominent respondents to MAS’s consultation was Coinbase, whose Singapore Country Director Hassan Ahmed acknowledged the regulator’s cautious approach while highlighting potential unintended consequences. “MAS has always prioritised user protection through cautious and measured regulation, and its latest response is another instance of this posture,” Ahmed told Decrypt. He expressed hope that the delay “might signal a reconsideration of the contemplated prudential requirements in order for Singaporean institutions to better and more fully participate in innovative technology.” The industry’s central concern revolves around the proposed risk classifications that could unfairly penalize assets built on permissionless blockchains like Ethereum, potentially stifling innovation in the sector.

The updated rules, based on standards set by the Basel Committee on Banking Supervision, represent a comprehensive framework for integrating crypto exposures into traditional banking supervision. Under the proposed framework, banks would be required to hold capital reserves against their crypto exposures in line with their risk classification, with cryptoassets deemed higher risk—particularly those on public, permissionless blockchains—attracting significantly higher capital requirements. Assets considered extremely volatile would require capital buffers of up to 1,250%, while those deemed stable and backed by eligible reserve assets could receive more favorable treatment.

MAS also proposed updates to the scope of eligible reserve assets for stablecoins and further defined how lower-risk and higher-risk cryptoassets should be treated on balance sheets. The changes are designed to clarify how banks account for cryptoassets in their capital, liquidity, and large exposure frameworks, effectively integrating crypto exposures into existing prudential standards. However, industry participants warned that the proposed risk classifications could lead to overcapitalization, particularly for assets on permissionless networks, creating potential barriers to institutional participation in innovative blockchain technology.

Singapore has established itself as a significant player in the digital asset space, implementing its initial regulatory framework in 2020 and maintaining a careful balance between innovation and financial stability. The country’s crypto adoption remains robust, with about 26% of Singaporeans holding some form of cryptocurrency as of April this year, according to a Straits Times report. More significantly, web3 investments accounted for 64% of total fintech funding in 2024, totaling US$742 million, demonstrating the sector’s substantial economic footprint.

Institutional appetite continues to grow, with 57% of local investors planning to increase crypto allocations, according to Sygnum Bank’s Future Finance Report. Local banks, which are the primary target of the delayed rules, have been actively expanding their crypto services. DBS recently launched tokenised structured notes on Ethereum, building on its prior work with tokenised bonds, while other lenders have pursued pilot projects on asset tokenisation and stablecoin integration. These developments highlight the growing integration of traditional finance and digital assets in Singapore’s financial ecosystem.

The regulatory delay comes as Singapore faces increasing competition from other jurisdictions that are refining their approaches to digital asset regulation. Coinbase’s Hassan Ahmed noted that while Singapore was early in establishing itself as a Web3 hub, the global regulatory landscape has since equalized. “Although Singapore was early, the global regulatory baseline has equalised since the passing of the GENIUS Act and with other leading hubs like Hong Kong, EU and UAE embracing this technology,” he observed.

Ahmed added that “many markets are refining existing rules to be more inclusive and invite institutional and corporate participation – particularly with respect to stablecoins. We are also seeing leading economies embrace crypto technology as crucial to their national and strategic competitiveness.” This global shift underscores the importance of MAS’s commitment to monitor developments in the cryptoasset landscape and global regulatory standards to ensure alignment while supporting responsible innovation. The one-year deferral provides Singapore with additional time to assess evolving international standards and potentially refine its approach to maintain its competitive position in the global digital asset ecosystem.