Singapore Financial Regulator Releases Updated Guide for ICOs

Singapore Financial Regulator Releases Updated Guide for ICOs

by December 3, 2018

The Monetary Authority of Singapore (MAS), the city state’s central bank and financial regulator, has released an update to its guide for businesses looking to raise money through initial coin offerings (ICOs). The paper, titled A Guide to Digital Token Offerings, provides guidance on the application of the securities laws in relation to offers or issues of digital tokens in Singapore and features case studies that put these regulatory requirements in perspective.


Monetary Authority of Singapore (MAS), via

In August 2017, MAS clarified that digital tokens that constitute capital markets products such shares, debentures, units in a business trust, securities-based derivatives contracts, or units in a collective investment scheme, are subject to and must comply with the applicable securities laws.

This includes the requirements that the offer must be made in or accompanied by a prospectus that is prepared in accordance with the Securities and Futures Act (SFA) and is registered with MAS. These also may be subject to authorization and recognition requirements in the case of a collective investment scheme.

Nevertheless, an offer may be exempt from the prospectus requirements and the authorization and recognition requirements if it is a small (personal) offer that does not exceed S$5 million within any 12-month period, a private placement offer made to no more than 50 persons within any 12-month period, or made to institutional investors only or accredited investors.

The guide also specifies the regulatory requirements for intermediaries facilitating offers or issues of digital tokens such as ICO platform operators, financial advisors, and trading platforms.

Unless otherwise exempted, operators of platforms that make primary offers or issues of digital tokens must hold a capital markets services license, financial advisors providing advice in Singapore in respect of any digital token that is an investment product must be authorized to do so in respect of that type of financial advisory service by a financial advisor’s license, and persons who establish or operate trading platforms in relation to digital tokens that constitute securities, derivatives contracts or units in a collective investment scheme, must be approved by MAS and recognized as a market operator under the SFA.

Securities tokens issuers and intermediaries much also comply with anti-money laundering and counter-terrorist financing (AML/CFT) requirements such as identifying, assessing and understanding relevant risks, and developing and implementing policies, procedure and controls in relation to customer due diligence and transaction monitoring.

MAS encourages companies looking to conduct ICOs and/or operate a platform involving digital tokens in Singapore to seek professional advice from qualified legal practitioners.

The updated guide follows up on the finalization of the Payment Services Bill, which states that providers of and intermediaries involved in digital payment tokens will be required to be licensed and regulated for AML/CFT purposes only. They will be required to put in place policies, procedures and controls to address money laundering and terrorism financing risks.

The Payment Service Bill, which was tabled for first reading at Parliament on November 19, 2018, aims to bring unregulated payment service providers under the charge of MAS. It is set to complement the Payment Systems Act and the Money-Changing and Remittance Businesses Act, the two pieces of legislation regulating Singapore’s payment services, and address the emergence of new payment services and methods such as digital payment tokens.

Ravi Menon, managing director of MAS, said the bill will enhance the regulatory framework for payment services in Singapore, strengthen consumer protection and engender confidence in the use of e-payments.

“The bill also illustrates our shift towards regulation that is modular, activity-based and facilitative of growth and development in the Singapore payments landscape,” Menon said.

The Payment Services Bill was finalized based on feedbacks from MAS’ public consultation in November 2017.

Singapore has emerged a leading cryptocurrency and blockchain hub and a front-runner in related technologies in recent years. In November, MAS and the country’s stock exchange, Singapore Exchange (SGX), unveiled a new settlement system for tokenized assets that can work across different blockchain. The system, an extension of Project Ubin, is aimed at making it easier for financial institutions to carry out the simultaneous exchange and final settlement of tokenized digital currencies and securities.

A few weeks later, Temasek Holdings Pte., Singapore’s state investment firm, announced that it was setting up new groups to explore opportunities in artificial intelligence and blockchain technologies. According to an internal memo obtained by Bloomberg, Temasek will be creating so-called “experimental pods” to focus on these two areas, which it sees as long-term trends impacting many industries and geographies.


Featured image: Cryptocurrency, Pixabay.