A Guide to Digital Tokens

The Monetary Authority of Singapore issued guidelines on initial coin offerings (ICOs) and how securities laws apply to the issuance of digital tokens. Relevant portions of the guidelines include:

  • On 1 August 2017, the Monetary Authority of Singapore (“MAS”) clarified that if a digital token constitutes a product regulated under the securities laws administered by MAS, the offer or issue of digital tokens must comply with the applicable securities laws.
  • This paper provides general guidance on the application of the securities laws administered by MAS in relation to offers or issues of digital tokens in Singapore.
  • Offers or 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, units  in  a  collective  investment  scheme,  derivatives  contracts  and  spot foreign exchange contracts for purposes of leveraged foreign exchange trading.
  • MAS  will  examine the  structure and  characteristics of, including the rights attached  to, a digital  token in  determining  if  the  digital  token  is  a  type  of capital markets products under the SFA.

A digital token may constitute:

  • a share, where it confers or represents ownership interest in a corporation, represents liability of the token holder in the corporation, and represents mutual covenants with other token holders in the corporation inter se;
  • a debenture, where it constitutes or evidences the indebtedness of the issuer of the digital token in respect of any money that is or may be lent to the issuer by a token holder; or
  • a unit in a collective investment scheme (“CIS”), where it represents a right or interest in a CIS, or an option to acquire a right or interest in a CIS.

Exemptions from registration can apply in qualifying circumstances, such as those which constitute a "small offer" which do not exceed S$5 million, offers of private placements to 50 or less persons, to institutional investors and accredited investors under certain conditions.

Document Details

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Year of Document: 
2018
Date of Document: 
Friday, November 30, 2018

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