Singapore, 17 May 2026
The Monetary Authority of Singapore (MAS) has proposed a fundamentally new, risk-based prudential framework for banks holding or issuing cryptoassets on public permissionless blockchains — and the consultation closes tomorrow, 18 May 2026.
The proposal marks a decisive shift from a historically conservative, default capital treatment to a flexible, principle-based approach that rewards demonstrated risk mitigation. Rather than applying broad blanket restrictions, MAS evaluates cryptoassets based on risk across four core areas: governance, technology, settlement finality, and AML/CFT compliance. Banks that can prove adequate safeguards — including diversified validators, transaction finality mechanisms, independent smart contract audits, and user verification controls — may qualify for more favourable capital treatment.
Crucially, the framework sets strict interim caps to manage systemic risk during the transition. Local banks would be allowed exposure up to 2% of Tier 1 capital under the alternative approach, with issuance capped at 5% of Tier 1 capital. Singapore branches face tighter limits of 0.2% exposure and 1% issuance relative to total assets. Anything above those thresholds defaults to conservative capital treatment. MAS retains override authority to reclassify any asset at any time, and banks must provide one months prior notice before applying the alternative approach, alongside senior management confirmation and MAS approval.
Industry analysis from Bird and Bird Singapore describes the proposal as a gamechanger that could unlock tokenized payments, stablecoin settlement, and blockchain financial infrastructure within Singapores regulated system. However, the regulatory standard is equally notable: MAS is explicit that it is not relaxing prudential standards — merely introducing a pathway for cryptoassets meeting defined criteria to receive favourable treatment. The broader ecosystem impact could be profound, forcing crypto providers to build governance-ready products from inception to meet bank-grade requirements.
The submission deadline of 18 May 2026 makes this the most immediate regulatory deadline for financial institutions in the region this week. MAS is seeking industry input on the adequacy of its principle-based deeming provisions, AML/CFT requirements, and the calibration of exposure and issuance caps. This will be one of the first major prudential frameworks for public blockchain cryptoassets anywhere in the world.
Sources: Bird and Bird Singapore; MAS media releases; Two Birds analysis. Consultation paper published April 2026. Feedback deadline: 18 May 2026.