The Monetary Authority of Singapore (MAS) clarified their position today on the recent spate of Initial Coin Offerings (ICOs) happening in Singapore. MAS said ICOs will be regulated if the digital tokens are deemed to be products covered by the Securities and Future Act .

It highlighted that many ICOs would fall under the regulatory statute, but took pains to note that certain ICOs would not qualify as securities, and thus would not be regulated.

e27 reached out to a few companies operating in the blockchain industry. They all universally welcomed the language and noted that is was important MAS approached ICOs with nuance.

“MAS has taken a practical approach to ICOs by stating that tokens which represent securities are regulated as securities, while others may not be regulated and would be judged on a case by case basis. This will allow the industry to continue to innovate and grow,” David Moskowitz, the Founder and CEO of Attores, told e27.

The MAS cited a recent increase in the number of companies pursuing the ICO strategy for raising funds. The regulatory body defined a crypto-token as such,

“Cryptographically-secured representation of a token-holder’s rights to receive a benefit or to perform specified functions.”

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The MAS statement briefly mentioned ‘digital currency’, but did not limit the phrasing to what the general public would associate with Bitcoin. MAS, correctly, called digital currency, “one kind of digital token”.

MAS also acknowledged digital tokens vary widely in type across Singapore, and thus, some ICOs; because of this, MAS recommended companies get outside legal advice in the following quote:

“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.”

In March 2014, MAS released a statement saying the digital tokens themselves would not be regulated, but that intermediaries would fall under MAS regulation citing terrorism and money laundering.

MAS pointed to risks created by the anonymous nature of the transactions and the ability for people to raise a lot of money extremely quickly. MAS said it is still working on a solution to regulate terrorism and money laundering concerns for tokens that do not fall under the ‘cryptocurrency’ label.

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MAS cited the technology’s evolution as reason why digital tokens will be regulated under the securities act. It pointed to the fact that ICOs often issue coins as representations of property or property that are not necessarily functioning as a currency ala Bitcoin (video game tokens is the obvious example).

Furthermore, digital tokens issued during an IPO represent debt owed by the company to its buyers, which makes it a transaction that should be regulated by the Securities Act.

If the token is deemed to fall under MAS regulation, companies will need to issue a prospectus with the government body. Platforms facilitating secondary trading will need to be approved and recognised by MAS.


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