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MAS issues guidelines on digital token offerings

SINGAPORE — The central bank has issued a paper on digital token offerings on Wednesday (Nov 15), to provide a “general guidance” on what could or could not be regulated in relation to the tokens.

SINGAPORE — The central bank has issued a paper on digital token offerings on Wednesday (Nov 15), to provide a “general guidance” on what could or could not be regulated in relation to the tokens.

The report comes in the wake of the recent increase in the number of initial coin or token offerings in Singapore as a way for start-ups to raise funds by creating and selling their own cryptocoins and tokens, usually as a way to get around using banks or venture capital firms in raising capital.

A digital token may be offered to buyers through an initial coin offering or other investment schemes, similar to how a company’s shares are sold to investors in an initial public offering. The token gives its holder rights to receive a benefit or perform specified functions. 
One particular type of digital token is virtual currency. Virtual currencies are typically used as a means to buy goods or services, and examples of these include Bitcoin and Ethereum.

The Monetary Authority of Singapore (MAS) noted in its report that the contents in its newly released guide are “not exhaustive,” have “no legal effect” and do not modify or supersede any applicable laws, regulations or requirements.
If the digital tokens are capital market products under the Securities Futures Act, the offers or issues of the tokens may be regulated, it said.

Under the Act, “capital market products” include any securities, futures contracts and contracts or arrangements for purposes of leveraged foreign exchange trading.

To determine if the digital token is a type of capital market product under the Act, the MAS will examine the structure and characteristics of the token, including the rights attached to it.

A digital token, for example, may constitute as a share, a debenture or as a unit.

A digital token share may represent ownership interest in a corporation.

A debenture is a type of instrument where issuers owe money to token-holders in the form of the digital token.

A digital token unit in a collective investment scheme represents a right or an interest in, say, an arrangement of a property, where participants have no day-to-day control over the property’s management.

In the 13-page guide, the MAS also said that it intends to establish a new payment services framework that would include rules to address money laundering and terrorism financing risks related to the dealing or exchange of virtual currencies for fiat (legal tender) or other virtual currencies.

Such intermediaries must put in place policies, procedures and controls to address such risks. These will include requirements to conduct customer due diligence, monitor transactions, perform screening, report suspicious transactions and keep adequate records.

The move would, for example, apply to virtual currency exchanges.

The activity of exchanging virtual currencies to fiat currencies is presently not regulated by MAS. Under the new payment services framework, the central bank plans to regulate such activity.

It added that it “encourages” those who wish to offer digital tokens in Singapore, or operate a platform involving the tokens, to seek professional advice. “(This is) to ensure that (the) proposed activities are in compliance with all applicable laws, rules and regulations in Singapore,” it said.


In August, the MAS announced that it would regulate the issue and offer of digital tokens in Singapore if the digital tokens constitute products governed by the Securities Futures Act. Digital tokens are vulnerable to money laundering and terrorist financing 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, it said then.

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