Information on the regulation of ICO in Singapore

Information on the regulation of ICO in Singapore

The Monetary Authority of Singapore (MAS) analyzed the conditions for the regulation of various types of tokens and published its recommendations on compliance with legislative requirements for ICO-companies.

The necessity to register such tokens is legislatively approved after the authoritative legal assessment and evaluation of the company's activities. Tokens will also be analyzed for compliance with the requirements of regulatory legal acts on combating money laundering and financing terrorism.

Let’s recall that tokens of the following classesfall under the regulation of the Monetary Authority of Singapore:

• credit tokens;
• token-shares;
• tokens-units of collective investments.

As an example, the MAS described a number of particular cases in which tokens fall under regulation.

Case 1

The company, which activities are related to the design and construction of real estate, refers to the real sector of the economy. If it launches collection of investments in Singapore through ICO (for the construction of a certain building), then the tokens it sells are digital expression of the right to participate in the company's share capital.

In the described situation, the MAS will treat tokens as securities. The company needs to obtain a license of a securities market participant, a license of a financial adviser and register an investment prospectus of tokens.

Case 2

A company that attracts investments through ICO at the international level is described. White Paper states that the company further uses the funds raised to invest in prospective fintech start-ups.

Tokens provide holders with revenue from the company's activities, but do not give rights to manage it. According to the classification of the MAS, such a token refers to tokens-units of collective investments and falls under the requirements of securities laws (Securities and Futures Act, section 9, part 13). Company need to register an investment prospectus of tokens and obtain an appropriate license of a securities market participant.

Case 3

A company that is registered in Singapore and conducts business in accordance with its laws launches ICO available only outside the jurisdiction. The collected funds will be used to invest in fintech start-ups in order to gain profit. Tokens are sold as guarantees for income from the activities of the company. Since ICO is conducted outside of Singapore, the tokens are not subject to legislative regulation. But in connection with the specifics of the company's investment activity in the jurisdiction of Singapore, it needs to obtain a license of a participant in the securities market.

Case 4

The company plans to launch a project to create a platform for start-ups and further raise funds for them. To implement the collection of investments for projects, the company will create an organization. Investors in the investment fund of start-ups will act as creditors of this organization (with a unique token). Along with the foregoing, the company advises its investors on the issues of further resale of tokens and provides a trading platform for these purposes.

In the case described, the token is an analogue of the loan agreement. The company that will give the right to issue tokens is required to obtain a license of a participant in the securities market. To further advise on the sales of tokens, it is necessary to obtain a license of a financial adviser. To run the trading platform, it will be necessary to register the company as a stock exchange or operator of the securities market. Each company established by the company to raise funds must develop and register an investment prospectus in accordance with applicable law.

Case 5

There is a certain company that deals with the conversion of tokens (not related to securities) into fiat money. It does not fall under the regulation of the MAS until it takes into circulation tokens that are equated to securities. From the moment they are introduced to the platform, the company needs to be registered as an exchange or a securities market operator.

Case 6

The company issues commoditytokens that do not provide their holders with any rights other than access to the project. Such a company does not fall under the regulation of the MAS.

Today, the MAS has launched a "sandbox" for participation in which all projects that fall under legislative regulation can apply. If the application is approved, companies will be able to obtain simplified registration requirements.

For more information, contact the company Law&Trust International.