Singapore MAS ban of stablecoin yields: A regulatory perspective

Came across a post earlier regarding Singapore's MAS ban of stablecoin yields, and just wanted to offer a regulatory perspective:

One reason why stablecoin yields are banned is because it acts in the same way as a bank deposit, but without any of the underlying consumer protections. Consider tradfi banks: when you deposit money into an account and earn interest, the banks have to hold a percentage in reserves and have to follow specific rules about what they do with deposited money.

On the other hand, since stablecoin issuers are not registered as banks under most jurisdictions, they do not have to follow the same regulations and are not subject to any prudential requirements - if they lend out the stablecoins you deposited and there is a significant market event leading to a loss, you will lose all your money without any recourse.

This is why part of MAS' proposals include strict winding-down procedures to ensure that consumers are able to redeem their original capital. This creates greater certainty and protection against an adverse market event.

For reference, this is not a unique proposition: under US' GENIUS Act and the EU MiCA, stablecoin yields are likewise banned. As of now, any interest-earning will be classified in most major market regulations as a lending protocol / money-market fund, and will be regulated accordingly. The position that regulators are taking seems to be that stablecoins are mainly for payment rather than for earning yield.