Singapore Central Bank: Token Sales May Be Subject to Securities Laws

Singapore’s central bank has issued new statements on the offering of digital tokens, stating that some issuances may fall under its definition of a security.

The Monetary Authority of Singapore (MAS) outlined its position on token sales – known more commonly as initial coin offerings, or ICOs – in a new statement published this morning. The regulator indicated that it considers some tokens as securities, depending on their underlying basis and the context of their issuance – a stance similar to the one expressed last week by the U.S. Securities and Exchange Commission.

The MAS explained in its release:

“MAS has observed that the function of digital tokens has evolved beyond just being a virtual currency. For example, 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 [Securities and Futures Act]. Digital tokens may also represent a debt owed by an issuer and be considered a debenture under the SFA.”

Token sales that fall under the MAS definition of a security would trigger relevant requirements, including the need to submit a prospectus with the central bank before the sale takes place. “Issuers and intermediaries” of such tokens, the MAS went on to explain, would also be subject to licensing requirements.

Like the SEC, the MAS indicated that companies that allow for the exchange of ICO-derived tokens would need to be sanctioned as well.

“In addition, platforms facilitating secondary trading of such tokens would also have to be approved or recognised by MAS as an approved exchange or recognised market operator respectively under the SFA,” the central bank said.

Ultimately, the MAS recommended that prospective token issuers seek out legal advice, as well as consult with the institution itself.

“All issuers of digital tokens, intermediaries facilitating or advising on an offer of digital tokens, and platforms facilitating trading in digital tokens should therefore seek independent legal advice to ensure they comply with all applicable laws, and consult MAS where appropriate,” the MAS said.