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Singaporeâs central bank, the Monetary Authority of Singapore (MAS), has published a document that seeks to clarify the nationâs ICO regulations. The document iterates many of the sentiments expressed in the United States Securities and Exchanges Commissionâs recent warnings, with Singaporeâs central bank stating that some ICOs may be subject to securities laws, depending on the utility of the token.
Also Read:Â 20+ New ICOs Announced Despite SEC Warnings
The MAS Has âObserved That the Function of Digital Tokens Has Evolved Beyond Just Being a Virtual Currencyâ
Singaporeâs central bank has issued a statement that seeks to clarify the nationâs ICO regulations. The document has been issued âin the wake of a recent increase in the number of initial coin (or token) offerings (ICOs) in Singapore as a means of raising funds.â
The document defines âdigital tokensâ as a âcryptographically-secured representation of a token-holderâs rights to receive a benefit or to perform specified functions.â Virtual currencies are defined as âone particular type of digital token, which typically functions as a medium of exchange, a unit of account or a store of value.â
Singaporeâs central bank has âobserved 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 issuerâs 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.â
âPlatforms Facilitating Secondary Trading of Such Tokens Would Also Have to Be Approved or Recognised by MAS⊠or Recognised⊠Under the SFA.â
The document states that businesses that âoffer or issue⊠digital tokens in Singaporeâ will fall under the regulatory jurisdiction of Monetary Authority of Singapore âif the digital tokens constitute products regulated under the Securities and Futures Act (Cap. 289) (SFA).â
The document also states that âplatforms 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.â
The Monetary Authority of Singapore has not yet determined how to regulate money laundering and terrorist financing risks that may be associated with digital tokens that have utility other than constituting a virtual currency. âICOs are vulnerable to money laundering and terrorist financing (ML/TF) 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⊠MAS is currently assessing how to regulate ML/TF risks associated with activities involving digital tokens that do not function solely as virtual currencies.â
Ultimately, Singaporeâs central bank recommends that businesses operating within the cryptocurrency industries should seek independent legal advice to avoid running afoul of the new ICO regulations. âAll 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.â
Do you think that ICOs will be able to continue to flourish despite growing pressure from regulators? Share your thoughts in the comments section below!
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