Singapore Warns 8 Crypto Exchanges Over Securities Law Compliance

The regulator also ordered one ICO to stop offering tokens due to lack of securities registration.

by Marin Marinov
25 May • 2 min
In Markets

The Monetary Authority of Singapore (MAS), the country’s central bank, has warned eight cryptocurrency exchanges about their obligation to have prior registration when offering virtual currencies that are securities, MAS announced on Thursday. The regulator has also ordered one issuer of Initial Coin Offering (ICO) to stop offering tokens to Singapore-based investors because of a lack of securities registration.

MAS, which serves as a watchdog for the financial sector in the city-state, reminded the eight crypto exchanges about their compliance with Securities and Futures Act (SFA).

If the digital tokens [in the meaning of cryptocurrencies] constitute securities or futures contracts, the exchanges must immediately cease the trading of such digital tokens until they have been authorised as an approved exchange or recognised market operator by MAS,” the central bank explained in a statement without naming the eight exchanges.

The central bank also halted one ICO, without naming it, saying it is in fact offering securities without having obtained the necessary registration.

“MAS has assessed 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,” the regulator explained.

Singapore and cryptocurrency

Under Singapore's SFA law, securities are debentures, stocks or shares issued or proposed to be issued by private companies or the state, including rights, options, derivatives and contract for differences (CFD) connected with them. The definition also includes value and prices of groups and indices, made by such instruments as well as collective investment schemes and business trusts.

“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,” Lee Boon Ngiap, Assistant Managing Director of Capital Markets at MAS said in a press release.

“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,” Ngiap added.

On Tuesday, the Monetary Authority of Singapore proposed regulation changes that aim to ease the registration process for blockchain-based decentralized exchanges.

The Singapore cryptocurrency market has grown in recent years, especially after China’s ban on virtual currency trading last year and the Singapore government's decision not to follow Beijing.

In 2016, MAS launched Ubin, a blockchain project that includes central bank digital currency (CBDC) as a virtual version of the Singapore dollar. The project is still in a test period and a final decision is expected at the end of the year.