What is an initial coin offering (ICO)? Is it regulated?
An ICO is an offer for sale of new digital tokens. A digital token is a digital representation of the rights of the holders of the token to receive a benefit or perform specified functions. Digital tokens and cryptocurrencies are both non-tangible assets that are created, traded and stored digitally. They use cryptography to encrypt and assure the authenticity of the digital assets.
Offers of sale of digital tokens are regulated in Singapore if the digital tokens constitute "capital markets products" under the Securities and Futures Act ("SFA"). When a digital token constitutes a "capital market products", the offer of the digital token may only be made to the retail public if the offer complies with, among other things, the prospectus requirements set out in Part XIII of the SFA, unless the offer is made pursuant to the exemptions prescribed in the SFA.
For more information, please click here for the MAS "Guide to Digital Token Offerings".
If the coin in question falls within the definition of a capital markets product (e.g. a security, a debenture or unit in a collective investment scheme), then the ICO is subject to the regulatory regime under Part XIII of the SFA, such as compliance with prospectus requirements, authorisation or recognition requirements in the case of a collective investment scheme, or otherwise avail itself to the applicable exemptions afforded under the SFA (such as offers to accredited or institutional investors, private placements or small offers).
If, however, the coin is considered as a digital payment token, then the offer of the coin may be considered as digital payment tokens, which is regulated as a digital payment token service under the PSA.