Singapore Regulator Blocks Unauthorised Security Token Trading

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Singapore’s Monetary Authority has flexed its regulatory muscles, warning eight cryptocurrency exchanges not to trade tokens that are securities or futures contracts without its permission, while also blocking an initial coin offering (ICO) in the island city-state.

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According to a press release Thursday, the Monetary Authority of Singapore (MAS) has reminded the eight exchanges, which it did not name, that they must seek MAS’ authorization if the digital tokens traded on their platforms constitute securities or futures contracts under the Securities and Futures Act (SFA).

If the digital tokens constitute securities or futures contracts, the exchanges must immediately cease the trading of such digital tokens until they have been authorized as an approved exchange or recognized market operator by MAS, the regulator said.

Additionally, MAS said it has directed an ICO issuer offering digital tokens to Singapore-based investors to stop doing so. It was assessed by the authority that the issuer had contravened the SFA as its tokens represented equity ownership in a company and therefore would be considered as securities under the SFA. Furthermore, the offer was made without a MAS-registered prospectus, which is a SFA requirement.

As a result of the intervention, the issuer has ceased the offer and has taken remedial actions to comply with MAS’ regulations, and returned all funds received from Singapore-based investors, the release stated.

Reiterating the authority’s position that digital token issuers, intermediaries, and platforms that offer, facilitate or trade digital tokens are responsible for ensuring that they comply with all relevant laws, Lee Boon Ngiap, Assistant Managing Director (Capital Markets), MAS, stated: “The number of digital token exchanges and digital token offerings in Singapore has been increasing.  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.”

About David Bentley

David Bentley is an experienced financial writer and communicator specializing in offshore financial services, hedge funds and technology.

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