On August 1, 2017, the Monetary Authority of Singapore (MAS) clarified its regulatory position on digital tokens and virtual currency in light of the increasing popularity of token offerings/ICOs. This closely follows a recent report by the US Securities and Exchange Commission that also dealt with token regulation.
According to MAS, if digital tokens constitute products regulated under Singapore’s Securities and Futures Act (Cap. 289), then their offer or issuance will fall under the regulatory purview of MAS. MAS functions as both Singapore’s central bank and financial regulatory authority.
The latest guidance will affect companies that engage in token offerings/ICOs and exchanges that facilitate trading.
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.
Issuers of digital tokens will face more stringent disclosure and licensing requirements from MAS, as will trading platforms.
Per the MAS release, “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.”
Digital asset owners will be heartened to learn that MAS acknowledges that a token can be representative of something other than currency or a security. MAS defines a digital token as “a cryptographically-secured representation of a token holder's rights to receive a benefit or to perform specified functions.”
With this announcement, MAS has taken an active – but cautious – approach to digital asset regulation. It’s worth noting that in late May, the MAS concluded its study of a tokenized national currency.