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MAS clarifies regulatory stand on digital tokens


The issuing of digital tokens such as virtual coins face regulation here if they are structured like securities coming under the Securities and Futures Act (SFA), the Monetary Authority of Singapore (MAS) said yesterday.

The clarification comes in the wake of a rise in initial coin offerings (ICOs) here as a means of fund-raising. The US Securities and Exchange Commission last week also issued a report that virtual coins or tokens may be securities subject to the federal securities laws.

ICOs are prone to money laundering and terrorist financing risks, given the anonymity of transactions and the ease of quickly raising large sums, MAS said.

Some digital tokens can confer on holders certain rights such as services, non-monetary rewards and physical assets such as gold.

A virtual currency is a type of digital token, which typically functions as a medium of exchange, a unit of account or a store of value.

Previously, MAS said that while virtual currencies per se were not regulated, the offerors of such currencies would be regulated.

But now, MAS says that offers of digital tokens will be regulated if they are structured like securities, debt, or units in a collective investment scheme under SFA.

MAS noted that the function of digital tokens has evolved.

For example, digital tokens may represent ownership or a security interest over an issuer's assets or property.

Issuers of such tokens would be required to register a prospectus with MAS prior to the offering of such tokens.

They would also be subject to licensing requirements under the SFA and Financial Advisers Act and to the applicable requirements on anti-money laundering and countering terrorism financing.

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FinancetechnologyMonetary Authority of Singapore