The Monetary Authority of Singapore (MAS) has issued a warning to eight cryptocurrency exchanges operating in Singapore. The notice told the exchanges NOT to facilitate trading in digital tokens nor future contracts without the explicitly authorization by MAS. The warning targeted security tokens and it was not immediately clear if the warning impacted alleged non security tokens. MAS also told an initial coin offering to cease the sale of the digital tokens in Singapore. MAS did not mention the exchanges nor ICO by name.
“The number of digital token exchanges and digital token offerings in Singapore has been increasing,” stated Lee Boon Ngiap, Assistant Managing Director of Capital Markets at MAS. “We do not see a need to restrict them if they are bona fide businesses. But if any digital token exchange, issuer or intermediary breaches our securities laws, MAS will take firm action. The public should be aware that there is no regulatory safeguard if they choose to trade on unregulated digital token exchanges or invest in digital tokens that fall outside the remit of MAS’ rules.”
MAS said that securities and futures contracts are regulated under the Securities and Futures Act (SFA). This applies to both more traditional and digital assets. If an exchange is engaged in the trading of securities tokens they must cease trading immediately until they have been authorized as an exchange or recognized as a market operator by MAS.
Regarding the problematic ICO, MAS has assessed that the issuer has “contravened the SFA as its tokens represented equity ownership in a company and therefore would be considered as securities under the SFA.” The ICO was made without a MAS-registered prospectus, which is a SFA requirement. MAS reports that the ICO issuer has ceased the offer and has taken remedial actions to comply with MAS’ regulations. It has also returned all funds received from Singapore-based investors.
MAS has taken a fairly liberal approach to blockchain innovation and the creation of cryptocurrencies but the regulator clearly expects issuers and enablers to abide by existing law designed to include investor protection aspects and block nefarious offers that have come to proliferate the ICO space. By regulating ICOs, MAS is better positioned to encourage a robust and sustainable cryptocurrency marketplace.