Initial Coin Offerings (ICOs) in Singapore

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Cryptocurrencies are all the rage right now – they make some very excited, others very confused, and yet others worried/cautious about the possible ramifications/fallout.

The Singapore Government, while certainly excited about some of the benefits/applications of blockchain and cryptocurrencies, is also rightly worried/cautious.

As the Monetary Authority of Singapore (MAS) explained this month:

“Virtual currencies can go beyond being a means of payment, and evolve into “second generation” tokens representing benefits such as ownership in assets, like a share or bond certificate. The sale of such “second generation” tokens to raise funds is commonly known as an initial coin offering or ICO. A number of ICOs have been structured out of Singapore in recent months.”

ICOs have recently been banned in China, leading to a wave of speculation on what Singapore would do about the practice. So far, it seems, the government is opting to bide its time. A wise decision.

We delved into the issue, and pulled out a few key takeaways from a recent statement issued by MAS on the subject of ICOs, dated October 3, that clearly highlight the government’s position:

1. ICOs are financial activities that falls under MAS’ regulatory ambit.
2. On 1 August 2017, MAS clarified that if a token is structured in the form of securities, the ICO must comply with existing securities laws aimed at safeguarding investors’ interest.
3. ICOs must meet the requirements of having to register a prospectus and obtain intermediary or exchange operator licences.
4. ICOs must also comply with existing rules on anti-money laundering and countering terrorism financing.
5. MAS has not issued new legislation specifically for ICOs, but will continue to monitor the developments of such offers, and consider more targeted legislation if necessary.

As the above points suggest, the Singapore Government may opt to implement further legislation around ICOs. But for now, at least, it falls under mainstream securities legislation and is not regulated per se.

For all the crypto-blockchain fans out there: a space to watch.

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