MAS to regulate digital tokens under one condition

This is if they constitute products regulated under the SFA.

The Monetary Authority of Singapore (MAS) clarified that the offer or issue of digital tokens in Singapore will be regulated by the central bank under one condition.

MAS noted that regulation will push through if the digital tokens constitute products regulated under the Securities and Futures Act (SFA).

The clarification comes in the wake of a recent increase in the number of initial coin (or token) offerings (ICOs) in Singapore as a means of raising funds.

"ICOs are vulnerable to money laundering and terrorist financing (ML/TF) 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," MAS noted.

The central bank added that whilst virtual currencies per se were not regulated, intermediaries in virtual currencies would be regulated for ML/TF risks. MAS is currently assessing how to regulate ML/TF risks associated with activities involving digital tokens that do not function solely as virtual currencies.

"MAS’ position of not regulating virtual currencies is similar to that of most jurisdictions. However, MAS has observed that the function of digital tokens has evolved beyond just being
a virtual currency," MAS said.

It explained that digital tokens may represent ownership or a security interest over an issuer’s assets or property.

"Such tokens may, therefore, be considered an offer of shares or units in a collective investment scheme under the SFA. Digital tokens may also represent a debt owed by an issuer and be considered a debenture under the SFA," MAS elaborated.

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