The Monetary Authority of Singapore is trying to align the world of cryptocurrencies with the securities law of Singapore through its recent publication of “Guide to digital token offerings.” This documents comes as the next chapter to the announcement made by MAS that ICO’s deemed to be issuing securities in Singapore need to go by the regulatory rulebook as administered by MAS.
The guidelines point out that, “issues of digital tokens may be regulated by MAS if the digital tokens are capital markets products under the SFA. Capital markets products include any securities, futures contracts and contracts or arrangements for purposes of leveraged foreign exchange trading.”
MAS has defined securities to comprise of shares, debentures, or an unit belonging to a collective investment scheme.
MAS states that “a person may only make an offer of digital tokens which constitute securities or units in a CIS (‘Offer’), if the Offer complies with the requirements under Part XIII of the SFA. This includes the requirements that the Offer must be made in or accompanied by a prospectus that is prepared in accordance with the SFA and is registered with MAS.”
The document also adds that “an Offer may nevertheless be exempt from the Prospectus Requirements where… the Offer is a small of securities of an entity, or units in a CIS, that does not exceed S5$ million…; the Offer is a private placement off made to no more than 50 persons…; the Offer is made to institutional investors only; or the offer is made to accredited investors.”
The document focusses on the regulatory implications for “intermediaries [that] typically facilitate offers or issues of digital tokens.” MAS has defined intermediaries as “a person who operates a platform on which one or more offerors of digital tokens may make primary offers or issues of digital tokens (‘primary platform’); a person who provides financial advice in respect of any digital tokens; [or] a person who operates a platform at which digital tokens are traded (‘trading platform’)”.
The document clearly points out that “a person who operates a primary platform in Singapore in relation to digital tokens which constitute any type of capital markets products, may be carrying on business in one or more regulated under the SFA,” and added that the said “person… must hold a capital markets services license for that regulated activity under the SFA.”
It also states that “a person who establishes or operates a trading platform in Singapore in relation to digital tokens which constitute securities or futures contracts, … must be approved by MAS as an approved exchange, or recognized by MAS as a recognized market operator under the SFA.” People providing financial advice in regard to digital tokens need to be “authorized to do so… by a financial adviser’s license, or be an exempt financial adviser, under the FAA.”
The MAS had previously stated that, “digital tokens that perform functions which may not be within MAS’ regulatory purview may nonetheless be subject to other legislation for combating money laundering and terrorism financing.” The regulator had also stated out its intention to, “establish a new payments services framework… that will include rules to address money laundering and terrorism financing risks relating to the dealing or exchange of virtual currencies.”
The date of publication of these guidelines coincided with the announcement made by MAS managing director Mr. Ravi Menon during the second Singapore Fintech Festival wherein he was quoted as saying, “MAS does not regulate virtual currencies; in fact, we welcome them as an innovation that can potentially reduce the cost of financial transactions. But we regulate the activities that surround virtual currencies if these activities pose specific risks.”
In his speech, Mr Menon addressed the regulatory position of Singapore pertaining to the world of cryptocurrencies and what the future holds for the same.
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