MAS clarifies regulatory position on offer of digital tokens in Singapore

THE Monetary Authority of Singapore (MAS) clarified on Tuesday that the offer or issue of digital tokens in Singapore will be regulated by the central bank if the digital tokens constitute products regulated under the Securities and Futures Act (Cap. 289) (SFA).

MAS' clarification comes in the wake of a recent increase in the number of initial coin or token offerings (ICOs) in Singapore as a means of raising funds.

It defines a digital token as a cryptographically-secured representation of a token-holder's rights to receive a benefit or to perform specified functions, while a virtual currency is a particular type of digital token, which typically functions as a medium of exchange, a unit of account or a store of value.

MAS said ICOs are vulnerable to money laundering and terrorist financing (ML/TF) risks due to the anonymous nature of the transactions, and the ease with which large sums of monies may be raised in a short period of time.

The central bank had said on March 13, 2014 that while virtual currencies per se were not regulated, intermediaries in virtual currencies would be regulated for ML/TF risks.

MAS is currently assessing how to regulate ML/TF risks associated with activities involving digital tokens that do not function solely as virtual currencies.

Where digital tokens fall within the definition of securities in the SFA, issuers of such tokens would be required to lodge and register a prospectus with MAS prior to the offer of such tokens, unless exempted.

Issuers or intermediaries of such tokens would also be subject to licensing requirements under the SFA and Financial Advisers Act (Cap. 110), unless exempted, and the applicable requirements on anti-money laundering and countering the financing of terrorism.

In addition, platforms facilitating secondary trading of such tokens would also have to be approved or recognised by MAS as an approved exchange or recognised market operator respectively under the SFA.