Following the US financial authorities, the Monetary Authority of Singapore has announced that tokens within the Initial Coin Offerings will be regulated in accordance with securities and future legislation.
The Singaporean regulator made this decision due to the recently increased number of ICOs among companies registered in Singapore. The Monetary Authority of Singapore (MAS) sees the difference between digital tokens, which it regards as a “cryptographically-secured representation of a token-holder’s rights to receive a benefit or to perform specified functions,” and virtual currency, which the regulator describes as “one particular type of digital token, which typically functions as a medium of exchange, a unit of account or a store of value.” Digital tokens are not limited to the functionality of virtual currencies. They may represent ownership or a security interest over an issuer’s assets or property. Such tokens can be considered as shares or units in a collective investment scheme or debt owed by an issuer and thus they should be regulated according to the Securities and Futures Act, the MAS statement said.
Thus, if the digital tokens have the characteristics of securities described in Singapore legislation, issuers of such tokens will have to register with the Monetary Authority of Singapore before conducting an ICO. Issuers or financial intermediaries of the ICO would also be subject to licensing requirements of the Singaporean legislation, and will also have to comply with the requirements for countering money laundering and financing of terrorism.It is worth mentioning also that the Singapore regulator also speaks about licensing of cryptocurrency exchanges, where tokens of projects will be traded after ICO: “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 Securities and Futures Act.”
The US Securities and Exchange Commission (SEC) put forward the same regulation a week ago: the US authorities also announced the need to classify tokens within the ICO as securities and exchange obligations, on which these tokens will continue to bargain, undergo licensing in the United States.
MAS emphasizes that the types of digital tokens offered in Singapore and other countries vary greatly: some proposals may be subject to securities and futures legislation, while others may not. The toughening of the regulation of the distribution of tokens is due to the fact that ICOs are vulnerable to money laundering and terrorist financing 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.” On 25 July, the US Securities and Exchange Commission (SEC) ruled that some tokens for sale are actually securities and, thus, are subject to SEC regulation.