The Monetary Authority of Singapore (MAS) recently stopped an initial coin offering (ICO) from proceeding in Singapore on grounds that the issuer failed to comply with the non-advertisement condition associated with the prospectus exemption the issuer was seeking to rely on. In this instance, the issuer’s legal advisers had published a LinkedIn post accessible to the public calling attention to the offer. Following a warning from MAS, the issuer suspended its global offering of securities tokens. In May 2018, MAS prohibited eight digital token exchanges in Singapore from trading in digital tokens (which constituted capital markets products) without requisite regulatory approval.

Offers or issues of digital tokens are regulated by MAS if the digital tokens constitute capital markets products under Singapore’s Securities and Futures Act (SFA). Capital markets products include any securities, units in a collective investment scheme, derivatives contracts, and spot foreign exchange contracts for purposes of leveraged foreign exchange trading. Under the SFA, an issuer may not make an offer of securities without first registering a prospectus with MAS unless certain specified exemptions are available, most common of which are the private placement exemption and the accredited/institutional investor exemption.  

Morgan Lewis Stamford regularly advises clients on ICO-related matters. In addition to advising clients on how they may market digital tokens in Singapore, we routinely counsel clients on whether Singapore law is likely to treat their digital tokens as securities, as well as licensing requirements that may apply to the issuer or capital market intermediaries involved in the ICO process (such as fund managers, dealer brokers, and digital exchanges).