Nature of NFTs

NFTs might be regulated as securities if they fit the definition of a "digital token",  and the definition of a security under the Securities and Futures Act.

"A digital token is a cryptographically-secured representation of a token-holder's rights to receive a benefit or to perform specified functions. A virtual currency is one particular type of digital token, which typically functions as a medium of exchange, a unit of account or a store of value."

Source: Simmons & Simmons, last revised 15 Aug 2017

According to MAS (Explainer)
last revised 26 May 2020

2.1 Offers or issues of digital tokens may be regulated by MAS if the digital tokens are capital markets products¹ under the 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.

Digital tokens which constitute capital markets products

2.2 MAS will examine the structure and characteristics of, including the rights attached to, a digital token in determining if the digital token is a type of capital markets products under the SFA.

For instance, a digital token may constitute –

2.3.1 a share, where it confers or represents ownership interest in a corporation, represents liability of the token holder in the corporation, and represents mutual covenants with other token holders in the corporation inter se;

2.3.2 a debenture, where it constitutes or evidences the indebtedness⁶ of the issuer of the digital token in respect of any money that is or may be lent to the issuer by a token holder;

2.3.3 a unit in a business trust, where it confers or represents ownership interest in the trust property of a business trust;

2.3.4 a securities-based derivatives contract, which includes any derivatives contract of which, the underlying thing is a share, debenture or unit in a business trust; or

2.3.5 a unit in a collective investment scheme (“CIS”), where it represents a right or interest in a CIS, or an option to acquire a right or interest in a CIS. 

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¹ Under section 2(1) of the SFA, “capital markets products” includes any securities (which includes shares, debentures and units in a business trust), units in a collective investment scheme, derivatives contracts (which includes derivatives of shares, debentures and units in a business trust), spot foreign exchange contracts for the purposes of leveraged foreign exchange trading, and such other products as MAS may prescribe as capital markets products.