Guide on the Tokenisation of Capital Markets Products

MONETARY AUTHORITY OF SINGAPORE 1
Monetary Authority of Singapore
GUIDE ON THE TOKENISATION OF CAPITAL MARKETS
PRODUCTS
[Last updated on 14 November 2025]

MONETARY AUTHORITY OF SINGAPORE 2
Contents
1 Purpose of this Guide ...............................................................................................3
2 When is a digital token a CMP as defined under the SFA? ......................................4
3 Application of securities law on issuances or offerings of tokenised CMPs in
Singapore.........................................................................................................................6
4 Application of securities law and other relevant legislation to activities
undertaken in relation to tokenised CMPs...................................................................13
5 Extra-territoriality of securities law........................................................................17
6 Application of sandbox criteria on activities regulated by MAS in relation to
tokenised CMPs.............................................................................................................17
Appendix 1……………………………………………………………………………………………………………… 18
Appendix 2 ………………………………………………………………………………………………………………33
Appendix 3……………………………………………………………………………………………………………….34

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 3 GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS 1 PURPOSE OF THIS GUIDE
1.1 The Guide on Digital Token Offerings (“DTO Guide”) was first published in 2017
and updated in 2020 to provide guidance on the application of the relevant laws administered by the Monetary Authority of Singapore (“MAS”), particularly in relation to issuances or offerings of digital tokens in Singapore.
1.2 Since then, new arrangements and activities relating to such tokens have
emerged. One area that MAS has seen growing interest in is the issuance and offering of capital markets products (“CMPs”) in the form of digital tokens via the process of tokenisation (“tokenised CMPs”). At the same time, activities involving tokenised CMPs have also expanded beyond issuances and offerings to encompass the entire capital markets value chain, for example, secondary trading, settlement and custody.
1.3 Tokenisation generally involves the use of a software programme to create a
digital token that constitutes or represents a CMP. These tokens are typically deployed onto programmable platforms such as distributed ledgers to record the ownership and transfer of the tokenised CMP. The combination of tokenisation and distributed ledger technology (“DLT”) offer significant opportunities, by allowing CMPs to be digitally represented, fractionalised, stored and exchanged on DLT networks that keep immutable records of transactions. This can potentially facilitate more efficient transactions, enhance financial inclusion and unlock greater economic value. However, the use of such technologies can create uncertainties in relation to the application of securities law and other relevant legislation to tokenised CMPs and activities involving such CMPs, and potentially introduce risks that are unique to the technology itself.
1.4 To support the development of a responsible digital asset ecosystem in
Singapore, MAS considers it timely and appropriate to update the DTO Guide and reissue it as a Guide on the Tokenisation of Capital Markets Products (“this Guide”), focusing on the application of securities law and other relevant legislation to (i) issuances and offerings of tokenised CMPs (Section 3); and (ii) entities that facilitate activities in relation to such tokenised CMPs (Section 4). For the purposes of this Guide,

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 4 securities law refers to the Securities and Futures Act 2001 (“SFA”) and the Financial Advisers Act 2001 (“FAA”) as well as relevant subsidiary legislation.
1.5 As elaborated in Section 2 below, the technology-neutral approach that MAS
had set out in the DTO Guide remains relevant for this Guide. MAS will continue to focus on the economic substance of tokenised CMPs and the associated activities that entities are facilitating vis-à-vis tokenised CMPs when determining the applicability of regulatory requirements under the securities law. Given the dynamic nature of developments in this space, MAS may issue further updates to this Guide to continue to provide regulatory clarity to industry participants involved in tokenisation activities across the capital markets value chain, where necessary.
1.6 Notwithstanding this Guide’s focus on tokenised CMPs, digital tokens that fall
within the regulatory ambit of other Acts administered by MAS, such as the Payment Services Act 2019 (“PS Act”), will also be mentioned, where relevant.
1.7 This Guide serves as a general reference and is not intended to be
comprehensive nor to replace or override any legislative provisions. It should be read in conjunction with the relevant legislative provisions as well as any relevant written directions, notices, circulars, codes and guidelines that MAS may issue from time to time. The contents of this Guide do not modify or supersede any applicable laws, regulations or requirements. 2 WHEN IS A DIGITAL TOKEN A CMP AS DEFINED UNDER THE SFA?
2.1 Existing legal and regulatory requirements will apply to both tokenised and nontokenised CMPs based on the principle of “same activity, same risk, same regulatory
outcome”. This is given that tokenised CMPs are essentially no different from nontokenised CMPs in economic substance. It is the form in which they are being created which differs (e.g. as a digital token deployed on a DLT network instead of a physical certificate or an electronic record within a centralised system). MAS adopts a technology-neutral approach, where the focus is on examining the economic substance of the digital token offered, to determine whether a digital token falls within

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 5 the definition of a CMP1 under the SFA, and if so, what specific type of CMP that digital token would be classified as (e.g. a security such as a share or debenture; a unit in a collective investment scheme (“CIS”), etc.).
2.2 Accordingly, when assessing whether a digital token is subject to regulation
under the SFA as a CMP, the assessment should generally comprise a holistic examination of the token including its characteristics, intent and structure, as well as the bundle of rights2 attaching to or derived from the token.
2.3 A number of case studies are set out in Appendix 1 to illustrate when a digital
token is likely to be a CMP subject to regulation under the SFA, as well as when a digital token is unlikely to be a CMP based on the principle noted in paragraph 2.2. The case studies also address the provision of financial advisory services in respect of investment products3 that are CMPs. MAS emphasises that these case studies are for the purpose of illustration only and are not conclusive of how the relevant laws will apply to a particular case. The characteristics discussed and the illustrations in the case studies are also not exhaustive and do not cover all types of CMPs under the SFA. We have deliberately avoided labels such as “utility token”, “security token”, or “native and non-native tokens” in this Guide. Relevant entities should obtain independent legal advice where necessary to ensure that their products and activities adhere to regulatory requirements at all times. 1 Under section 2(1) of the SFA, “capital markets products” means any securities (which includes shares, debentures and units in a business trust), units in a CIS, 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. 2 As the focus is on the legal status of the token, this entails an examination of the overall arrangement in which such token exists, including whether the token legally entitles the holder of the token to rights inherent to the CMP, instead of simply examining the token in isolation. Such an examination should ordinarily involve a review of all relevant documents such as contracts or other legal documentation governing the issuance of the token, offering documents, marketing materials, and other types of investor communications and documentation. 3 “investment product” means — (a) any capital markets products; (b) spot foreign exchange contracts other than for the purposes of leveraged foreign exchange trading; (c) any life policy; or (d) any other product as may be prescribed.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 6 3 APPLICATION OF SECURITIES LAW ON ISSUANCES OR OFFERINGS OF TOKENISED CMPs IN SINGAPORE a) SFA requirements applicable to offerings of tokenised CMPs
3.1 Offers of tokenised CMPs that constitute securities
4
, securities-based derivatives contracts or units in a CIS are subject to the same regulatory regime under
Part 13 of the SFA as offers of securities5
, securities-based derivatives contracts6 or units in a CIS7 respectively that are not tokenised.
3.2 A person may only make an offer of tokenised CMPs that constitute securities,
securities-based derivatives contracts or units in a CIS (“Offer”), if the Offer complies with the requirements under Part 13 of the SFA8 . This includes the requirements that the Offer must be made in or accompanied by a prospectus that is prepared in accordance with the SFA and is registered with MAS (“Prospectus Requirements”).
3.3 In addition, where an offer is made in relation to units in a CIS, the CIS is subject
to authorisation or recognition requirements 9 (“Authorisation/Recognition Requirements”). An authorised CIS or a recognised CIS under the SFA must comply with investment restrictions10 and business conduct requirements11. Please refer to the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005 (“SF(OI)(CIS)R”), the Code on Collective Investment Schemes (“Code on CIS”) and the Practitioner’s Guide to the CIS Regime under the SFA, for details. 4 Includes shares, debentures and units in a business trust. Please see section 2(1) of the SFA for the definition of “securities” under the SFA. 5 Division 1 of Part 13 of the SFA. 6 Division 1 of Part 13 of the SFA. 7 Division 2 of Part 13 of the SFA. 8 Please see, for example, sections 240, 240AA, 296 and 296A of the SFA. 9 Please see sections 286 and 287 of the SFA. Please also refer to Part II of the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005. 10 Please refer to Appendix 1 of the Code on CIS. 11 Please refer to the Code on CIS.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 7
3.4 An Offer may nevertheless be exempt from the Prospectus Requirements and,
in the case of units in a CIS, the Authorisation/Recognition Requirements, where, among others –

The Offer is a small (personal) offer12 that does not exceed S$5 million (or its
equivalent in a foreign currency) within any 12-month period, subject to certain conditions;
The Offer is a private placement offer13 made to no more than 50 persons
within any 12-month period, subject to certain conditions;
The Offer is made to institutional investors14 only; or
The Offer is made to accredited investors15, subject to certain conditions.
The exemptions for a small (personal) offer, a private placement offer, and an offer made to accredited investors, are respectively subject to certain conditions which include advertising restrictions16 . b) Disclosures to investors for offerings of tokenised CMPs
3.5 Section 243 of the SFA 17 requires a prospectus for an offer of securities,
securities-based derivatives contracts or units in a CIS, to disclose all the information that investors and their professional advisers would reasonably require to make an informed assessment of, among other things, the issuer and the product being offered, including the rights and liabilities attaching to the product. 12 Please see sections 272A and 302B of the SFA. A small offer must be a personal offer that satisfies section 272A(3) and 302B(3) respectively. A personal offer is one that is made to a pre-identified person, which includes offers made to persons who have previous professional or other connection with the offeror. As the word “personal” suggests, each personal offer must be made personally by the offeror, or by a person acting on its behalf, to the pre-identified person, and may only be accepted by the pre-identified person to whom the offer was made. Please refer to the Guidelines on Personal Offers made pursuant to the Exemption for Small Offers for further details. 13 Please see sections 272B and 302C of the SFA. 14 Please see sections 274 and 304 of the SFA. Please refer to section 4A(1)(c) of the SFA for the definition of “institutional investor”. 15 Please see sections 275 and 305 of the SFA and the Sixth Schedule to the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005. Please refer to section 4A(1)(a) of the SFA for the definition of “accredited investor” and regulation 2 of the Securities and Futures (Classes of Investors) Regulations 2018. 16 Please refer to section 272A(10) and 302B(10) of the SFA for the definition of “advertisement”. For more information on the advertising restrictions with respect to offers of shares and debentures, please refer to the Guidelines on the Advertising Restrictions in Sections 272A, 272B and 275 (Guideline No. SFA13-G15). 17 Please also see the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018 and the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations 2005.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 8
3.6 A prospectus for an offer of tokenised CMPs that constitute securities,
securities-based derivatives contracts or units in a CIS, should therefore include information related specifically to the characteristics of and risks arising from the tokenised nature of the CMP in accordance with the aforesaid requirements. This is given that the use of DLT and tokenisation involve technologies, processes and operating environments that are not present in relation to non-tokenised CMPs.
3.7 We set out below examples of areas where information may be considered
material for disclosure (“Disclosure Illustrations”). These are intended for illustrative purposes, and are not exhaustive. Issuers of the tokenised CMPs should carefully assess and consider the context and specific characteristics of their offering in determining material information that should be disclosed18 . Characteristics of tokenisation / tokenised CMPs
i. The technologies underpinning the deployment of the tokenised CMP

Type of DLT (or other types of technologies) used, accessibility features
of the DLT network (i.e. private or public, permissioned or permissionless), and measures in place relating to network and/or application security, including areas such as identity and access management.
Use of smart contracts on the DLT network, and the governance and
operation of such smart contracts (e.g. whether a smart contract audit has been conducted before deployment).
Processes and controls relating to the minting, issuing, transferring,
redeeming and burning of tokens.
Key intermediaries involved in the set-up and operation of the DLT
network and the role of these intermediaries (e.g. operator of the DLT network). 18 Issuers relying on exemptions from the Prospectus Requirements under paragraph 3.4 may also consider the Disclosure Illustrations in their disclosures to investors in relation to their offers, where relevant.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 9
ii. Rights and liabilities in relation to tokenised CMPs

Bundle of rights and liabilities attaching to or derived from the token
(e.g. whether the token confers legal or beneficial title to a CMP), as well as its characteristics, intent and structure.
How ownership rights in the tokenised CMP are recorded including
whether such records are maintained on or off the DLT network, the mechanisms for transfer of ownership rights and when such transfers are considered final. Where there is more than one record of ownership rights (e.g. on-chain and off-chain), to disclose which records are definitive of legal ownership rights to the tokenised CMP.
The rights of the issuer or other entities to amend or override records
on the DLT network, if any, and specific circumstances under which such rights may be exercised.
The legal and regulatory frameworks governing the overall arrangement,
and the characterisation thereunder (e.g. regulated as a debenture under the SFA).
iii. Custody of the tokenised CMPs
Custody arrangement for the tokenised CMP (whether held directly by
the investor, safeguarded by the issuer or the issuer’s related corporations, or a third-party custodian19) including processes for the management of private key(s) used to access the token. For tokenised CMPs that are safeguarded by the issuer or its related corporations, the processes that are in place to ensure that the investors’ tokenised CMPs are distinguishable and maintained separately from the issuer’s own assets or the assets of its related corporations. 19 To be clear, the requirements set out in Division 3 of Part III of the Securities and Futures (Licensing and Conduct of Business) Regulations on “Customer’s Assets” will apply to CMPs received by a holder of a capital markets services licence to be held on account of the customer or as collateral for any amount owed, even if the CMPs are in tokenised form.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 10

Where there are assets backing the tokenised CMP, the custody
arrangement for such assets (e.g. if the token is meant to confer fractional interests in a debenture that has been issued in the market, the custody arrangement for that debenture). Risks relating to tokenisation / tokenised CMPs
i. Technology and cyber risks – given that tokenised CMPs may utilise a different
type of technology (such as DLT) from non-tokenised CMPs, technology and cyber risks may manifest in a different manner as compared to non-tokenised CMPs. For example:
Risks relating to the malfunctioning of the DLT network and/or smart
contracts (e.g. coding errors and connectivity issues) which may impact the issuance and transfer of tokenised CMPs and subsequent access by investors.
Risks relating to security breaches (e.g. cyber-attacks on the DLT
network and exploitation of smart contract vulnerabilities) which may result in theft or the loss of investors’ tokenised CMPs or ownership records.
Risks associated with the use of certain types of blockchains like publicpermissionless blockchains (e.g. forking where the DLT network may be
split into competing versions or 51% attack where the DLT network is manipulated).
ii. Operational risks – given that DLT and tokenisation can result in changes to
existing processes or introduce new processes/operating environments, holders of tokenised CMPs may be exposed to different types of operational risks as compared to non-tokenised CMPs. For example:
Arrangement(s) with third-party service providers (e.g. providing DLT
infrastructure/network or tokenisation-related services) and risks that

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 11 may arise in the event of failure of these arrangement(s) (e.g. unanticipated disruptions, slower response times).
iii. Legal and regulatory risks – given the evolving legal and regulatory landscape,
there may be potential challenges in relation to tokens and tokenisation arrangements. For example:

Risks relating to current and future legal or regulatory frameworks that
may impact the issuance, trading or redemption of tokenised CMPs on the DLT network (e.g. the legal status of tokenised CMPs under property law).
Risks to the value of the tokenised CMP as a result of legal or regulatory
uncertainties or reforms.
iv. Custody risks – given that the manner of custody for tokenised CMPs differs
from non-tokenised CMPs, holders of tokenised CMPs may be more susceptible to custody risks or are exposed to different types of custody risks as compared to non-tokenised CMPs. For example:
Risks relating to the custody arrangements for tokenised CMPs, such as
the loss/theft of private key(s) which are used to access such CMPs, and how the materialisation of such risks would impact investors.
Risks relating to the custody arrangements for assets (if any) backing the
tokenised CMPs, and how the materialisation of such risks would impact investors.
v. Other applicable risks – such as pricing or liquidity risks in relation to the lack of
an active trading market for tokenised CMPs.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 12 c) Distribution safeguards for offerings of tokenised CMPs
3.8 Tokenised CMPs are subject to the same complex products framework as nontokenised CMPs, and will need to be classified as complex or non-complex products20
.
Similar to non-tokenised CMPs, tokenised CMPs that are classified as complex must be sold with enhanced distribution safeguards. These safeguards include the requirement to assess a customer’s investment knowledge and experience before enabling the customer to invest in tokenised CMPs that are classified as complex products.
3.9 Consistent with the technology-neutral approach described in paragraph 2.1,
the determination of whether a tokenised CMP is a complex or non-complex product will be based on an assessment of the product-specific characteristics exhibited by the CMP, and not whether the CMP is in the form of a digital token. For example, if a tokenised CMP constitutes a share, which is one of the CMPs prescribed in the
Schedule of the Securities and Futures (Capital Markets Products) Regulations 2018,
the tokenised CMP would be classified as a non-complex product.
3.10 A holder of a capital markets services licence, person exempted under section
99(1)(a) or (b) of the SFA, and their representatives must accordingly comply with the relevant requirements governing the sale of such investment products as set out in SFA04-N12 Notice on the Sale of Investment Products and similarly, a licensed financial adviser, person exempted under section 20(1)(a) to (e) of the FAA and their representatives with FAA-N16 Notice on Recommendations of Investment Products. d) Enquiries on issuances and offerings of digital tokens
3.11 If you wish to issue or offer digital tokens in Singapore, you are encouraged to
seek professional advice from qualified legal practitioners to determine if your proposed digital tokens fall within the definition of a CMP under the SFA (thereby being a tokenised CMP) and to ensure that your proposed activities comply with all applicable laws, rules and regulations in Singapore. You should also read this Guide carefully to 20 Complex and non-complex products are also referred to as Specified Investment Products and Excluded Investment Products respectively. As a default, the classification is to be determined by the issuer of the tokenised CMP. However, if the tokenised CMP is issued outside of Singapore and the issuer has not determined the classification, the distributing financial institution may implement a system to identify and determine that the tokenised CMP is a non-complex product. Where the distributing financial institution does not implement such a system, the tokenised CMP is to be classified as complex and the enhanced distribution safeguards for complex products will apply.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 13 assess if your proposed issuance or offering is required to comply with the securities law administered by MAS.
3.12 Critical questions have been set out in Appendix 2, which will help you
determine if it is necessary to write to us on your proposed issuance or offering. MAS will only review legal opinions and engage digital token offering issuers where the structure of the proposed digital token, or the proposed business model, is not similar to that described in the case studies in this Guide. Going through all the case studies and answering all the critical questions will guide you in determining your case.
3.13 If it is still necessary to write to us after going through this Guide and the critical
questions, you may submit an application to us enclosing all the information stated in the Checklist in Appendix 3. MAS reserves the right to ask for more information as may be necessary for us to consider whether the digital token offerings are subject to MAS’ regulations.
3.14 MAS wishes to clarify that our reply is not an endorsement of your proposed
digital token, offering or business model. Our reply also does not preclude us from taking any enforcement action against you for a contravention of any provision in any legislation administered by us. This includes situations where there are omissions in or changes to the facts represented in your correspondence with us. 4 APPLICATION OF SECURITIES LAW AND OTHER RELEVANT LEGISLATION TO ACTIVITIES UNDERTAKEN IN RELATION TO TOKENISED CMPs a) Licensing requirements under the SFA and the FAA
4.1 The manner in which activities relating to tokenised CMPs are carried out could
differ from non-tokenised CMPs, and new intermediaries and service providers could also be involved. MAS will focus on evaluating the substance of the activities carried out in relation to tokenised CMPs when determining if these are regulated activities under the SFA and/or FAA, which requires the person carrying out the activities to obtain the relevant licence.

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4.2 MAS has observed the following examples where one or more of the following
types of intermediaries and service providers are typically involved in carrying out activities in relation to tokenised CMPs. Person operating a platform on which one or more offerors of tokenised CMPs may make primary offers or issuances of tokenised CMPs (“primary market platform”)
4.3 A person who operates a primary market platform in Singapore in relation to
tokenised CMPs, may be carrying on business in one or more regulated activities21 under the SFA. Where the person is carrying on business in any regulated activity, or holds himself out as carrying on such business, he must hold a capital markets services licence for that regulated activity under the SFA, unless otherwise exempted22 . Person operating a platform on which tokenised CMPs are traded (“trading platform”)
4.4 A person who establishes or operates a trading platform in Singapore in relation
to tokenised CMPs which constitute securities, derivatives contracts or units in a CIS, may be establishing or operating an organised market23. A person who establishes or operates an organised market, or holds himself out as operating a market, must be approved by MAS as an approved exchange or recognised by MAS as a recognised market operator under the SFA24, unless otherwise exempted. Person providing custody of tokenised CMPs
4.5 A person who has possession or control of the specified products 25 of his
customers may be carrying out the regulated activity of providing custodial services under the SFA. Where the person is carrying on business in providing custodial services, or holds himself out as carrying on such business, he must hold a capital markets services licence for providing custodial services, unless otherwise exempted. 21 Please see the Second Schedule to the SFA for the types of activities regulated as “regulated activities” under the SFA. 22 Please see section 82 of the SFA. 23 Please refer to Part 1 of the First Schedule to the SFA for the definition of an “organised market”. 24 A person operating a platform facilitating secondary trading of tokens which constitute securities may refer to the Guidelines on the Regulation of Markets (Guideline No. SFA02-G01) for guidance on whether it should apply to be an approved exchange or a recognised market operator under the SFA. 25 Under section 2(1) of the SFA, “specified products” mean securities, specified securities-based derivatives contracts or units in a CIS.

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4.6 In the context of tokenised CMPs which constitute specified products, a person
will have “control” of a token if he has the ability to control access to the token or to execute transactions involving the token. This includes control of instruments that are associated with the token, such as private cryptographic keys. Such control of the token or the instrument associated with the token need not be absolute or exclusive. For instance, even where a person only holds one of several private cryptographic keys (e.g. a platform key), or one of several shards of a private cryptographic key, as long as such person maintains control of the cryptographic key or shard thereof, either directly or through a third party, and that cryptographic key or shard thereof may be used to co-authorise a transaction involving the tokenised CMP, that person may be considered to have “control” of the token. Person providing financial advice in respect of tokenised CMPs
4.7 A person carrying on the business of providing financial advisory services26 in
Singapore in respect of any tokenised CMPs, must be authorised to do so in respect of that type of financial advisory service by a financial adviser’s licence, or be an exempt financial adviser27 , under the FAA28 . b) Application of Anti-Money Laundering and Countering the Financing of Terrorism Laws
4.8 MAS emphasises that requirements on anti-money laundering and countering
the financing of terrorism (“AML/CFT”) as set out in the relevant MAS Notices29 , are applicable to certain persons30 carrying out activities in relation to tokenised CMPs. Such requirements include the following:
26 Please see section 6, read with the definition of “financial adviser” under section 2(1), of the FAA. Please note that a financial adviser does not include any person specified in the First Schedule to the FAA. 27 Please see section 6 of the FAA. 28 A corporation that wishes to apply for a FA licence may refer to the Guidelines on Criteria for the Grant of a Financial Adviser’s Licence (Guideline No. FAA-G01) and the Guidelines on Licence Applications, Representative Notification and Payment of Fees (Guideline No. CMG-G01). 29 These Notices include (but are not limited to) Notice SFA04-N02 to Capital Markets Intermediaries on Prevention of Money Laundering, Notice FAA-N06 on Prevention of Money Laundering and Countering the Financing of Terrorism - Financial Advisers, and Notice SFA02-N05 to Approved Exchanges and Recognised Market Operators on Prevention of Money Laundering and Countering the Financing of Terrorism. 30 Please refer to the applicable Notices for more details.

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i. taking appropriate steps to identify, assess and understand their money
laundering and terrorism financing (“ML/TF”) risks;
ii. developing and implementing policies, procedures and controls – including
those in relation to the conduct of customer due diligence and transaction monitoring, screening, reporting suspicious transactions and record keeping – in accordance with the relevant MAS Notices, to enable them to effectively manage and mitigate the risks that have been identified;
iii. performing enhanced measures where higher ML/TF risks are identified,
to effectively manage and mitigate those higher risks;
iv. monitoring the implementation of those policies, procedures and controls,
and enhancing them if necessary; and
v. complying with value transfer requirements when effecting the sending of
tokenised CMPs, or when receiving tokenised CMPs on the account of the value transfer originator or the value transfer beneficiary, by value transfer.
4.9 MAS would like to additionally highlight, in particular, the following obligations
under other legislation for combating ML/TF which all persons would have to abide by:
i. Obligations to report suspicious transactions with the Suspicious
Transaction Reporting Office, Commercial Affairs Department of the Singapore Police Force undersection 45 of the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (“CDSA”); and
ii. Prohibitions from dealing with or providing financial services to designated
individuals and entities pursuant to the Terrorism (Suppression of Financing) Act 2002 (“TSOFA”) and various regulations giving effect to United Nations Security Council Resolutions (“UN Regulations”).

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 17 5 EXTRA-TERRITORIALITY OF SECURITIES LAW
5.1 Where any issuance or offering of tokenised CMPs covered under Section 3(a)
or any activities in relation to tokenised CMPs covered under Section 4(a) (other than paragraph 4.7) is done partly in Singapore and partly outside Singapore, or outside of Singapore but which has a substantial and reasonably foreseeable effect in Singapore, the requirements of the SFA may nevertheless apply extra-territorially to the act of that person under section 339 of the SFA. Please refer to the Guidelines on the Application of Section 339 (Extra-Territoriality) of the SFA (Guidelines No. SFA15-G01), for details.
5.2 For activities in relation to tokenised CMPs covered under paragraph 4.7, the
requirements of the FAA apply extra-territorially where a person outside Singapore engages in any activity or conduct that is intended to or likely to induce the public, or a section of the public, in Singapore to use any financial advisory services provided by the person31 . 6 APPLICATION OF SANDBOX CRITERIA ON ACTIVITIES REGULATED BY MAS IN RELATION TO TOKENISED CMPs
6.1 Any firm that is applying technology in an innovative way to conduct activities
that are regulated by MAS under the SFA and/or FAA can apply for the regulatory sandbox32. MAS expects that interested firms would have done their due diligence, such as testing the proposed activity in a laboratory environment and knowing the legal and regulatory requirements for deploying the proposed activity, prior to submitting an application. Please refer to the evaluation criteria outlined in the “FinTech Regulatory Sandbox Guidelines”.
6.2 If an application is approved, MAS will provide the appropriate regulatory
support by relaxing specific legal and regulatory requirements prescribed by MAS, which the applicant would otherwise be subject to, for the duration of the sandbox. 31 Please see section 6(2) of the FAA which deems such a person to be acting as a financial adviser in Singapore. 32 The offering of tokenised CMPs, as set out under Section 3(a), would ordinarily not fall within the ambit of the regulatory sandbox programme.

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Appendix 1
CASE STUDIES OF DIGITAL TOKENS THAT MAY CONSTITUTE CMPs Share A digital token may constitute a share33, where it confers or represents ownership interest in a corporation34, represents liability of the token holder in the corporation35 , and represents mutual covenants with other token holders in the corporation inter se36 . Case study 1 Company A is in the business of developing real estate and operating commercial buildings. It plans to raise funds to develop a shopping mall by offering Token A to any person globally, including in Singapore. Token A will be structured to represent a share in Company A, and will be a digital representation of a token holder’s ownership in Company A. Company A also intends to provide financial advice in relation to its offer of Token A. Application of relevant laws administered by MAS in relation to Token A

Token A will be a share and constitutes a security under the SFA.
Company A will need to comply with Prospectus Requirements when it offers
Token A, unless the offer is otherwise exempted under the SFA. When preparing its prospectus for the offer of Token A, Company A should take into account the Disclosure Illustrations.
Company A will be required to hold a capital markets services licence for dealing
in CMPs that are securities under the SFA unless (a) it is not in the business of dealing in CMPs that are securities, or (b) it is in the business of dealing in CMPs that are securities, but an applicable exemption applies. For example, if it is carrying on business in dealing in CMPs that are securities for its own account 33 Under section 2(1) of the SFA read with section 4(1) of the Companies Act, “share” means “share in the share capital of a corporation and includes stock except where a distinction between stocks and share is expressed or implied.”. 34 Halsbury Laws of Singapore vol 6, (LexisNexis, 2010) at paragraph 70.343. 35 Ibid. 36 Ibid.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 19 through certain financial institutions regulated by MAS37, such as a holder of capital markets services licence to deal in CMPs that are securities.

Holders of a capital markets services licence are required to comply with
AML/CFT requirements under MAS Notice SFA04-N02.
To provide financial advice in relation to its offer of Token A, Company A will need
to be a licensed financial adviser, unless it is otherwise exempted38 .
Licensed financial advisers are required to comply with AML/CFT requirements
under MAS Notice FAA-N06.
Debenture
A digital token may constitute a debenture, where it constitutes or evidences the indebtedness39 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. Case study 2 Company B plans to set up a platform that helps start-ups raise funds from investors through digital token offerings (“Offerings”). To facilitate the Offerings, Company B will set up an entity (“Entity”) which will be used as a vehicle to make investments into a start-up, for every start-up launching Offerings via Company B’s platform. Investors who wish to invest into a start-up will provide a loan to the respective Entity (“Loan”). In return, the Entity will issue to the investors, digital tokens that are unique to the start-up (“Token B”). Token B will be offered to any person globally, including in Singapore. Token B will represent the rights of an investor as a creditor of the Loan provided to the Entity. Company B’s platform will also operate as a market to facilitate secondary trading of Token B among investors using Company B’s platform. In addition, Company B intends to provide financial advice to investors on the Offerings. 37 Please refer to paragraph 2(1)(a) of the Second Schedule to the Securities and Futures (Licensing and Conduct of Business) Regulations (Rg 10). 38 If Company A holds a capital markets services licence for dealing in CMPs under the SFA, Company A is exempt from holding a financial adviser’s licence to act as a financial adviser in Singapore in respect of any financial advisory service. Instead, Company A will be subject to certain reporting requirements, including the requirement under regulation 37(1) of the Financial Advisers Regulations (Rg 2) to lodge a notification to MAS that it is commencing business in a financial advisory service under the FAA. 39 Halsbury Laws of Singapore vol 6, (LexisNexis, 2010) at paragraph 70.394.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 20 Application of relevant laws administered by MAS in relation to Token B

Token B will be a debenture and constitutes a security under the SFA.
The Entity will need to comply with Prospectus Requirements when it offers
Token B, unless otherwise exempted under the SFA. When preparing its prospectus for the offer of Token B, the Entity should take into account the Disclosure Illustrations.
Company B, in facilitating the purchase or sale of Token B on its platform, will be
required to hold a capital markets services licence for dealing in CMPs that are securities under the SFA, unless otherwise exempted.
Depending on the business activities that an Entity undertakes, including on
Company B’s platform, the Entity may require a capital markets services licence for dealing in CMPs that are securities under the SFA, unless otherwise exempted.
Holders of a capital markets services licence are required to comply with
AML/CFT requirements under MAS Notice SFA04-N02.
Company B is also likely to be operating an organised market as it facilitates the
secondary trading of Token B. On this basis, Company B will have to be approved by MAS as an approved exchange or recognised by MAS as a recognised market operator under the SFA, unless otherwise exempted.
To provide financial advice in relation to an offer of Token B by the Entity,
Company B will need to be a licensed financial adviser, unless it is otherwise exempted40 .
Licensed financial advisers are required to comply with AML/CFT requirements
under MAS Notice FAA-N06.
Case study 3
Company C plans to set up a platform that allows investors to invest in physical diamonds through the tokenisation of physical diamonds. Company C intends to offer Token C in Singapore to raise funds to develop the platform. Token C will give holders the right to use the platform and to sell their Token C back to Company C at any time. Token C does not represent a right to physical diamonds or any other functions or rights other than the use of the platform. All unsold Tokens C will be destroyed. 40 If Company B holds a capital markets services licence for dealing in CMPs under the SFA, Company B is exempt from holding a financial adviser’s licence to act as a financial adviser in Singapore in respect of any financial advisory service. Instead, Company B will be subject to certain reporting requirements, including the requirement under regulation 37(1) of the Financial Advisers Regulations (Rg2) to lodge a notification to MAS that it is commencing business in a financial advisory service under the FAA.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 21 Application of relevant laws administered by MAS in relation to Token C

As Company C is under an obligation to buy-back Token C from the holders, Token
C may constitute a debenture if Token C represents Company C’s indebtedness to the holder to pay back the holder a certain amount.
If Token C is a debenture, Company C will need to comply with Prospectus
Requirements when it offers Token C, unless otherwise exempted under the SFA. When preparing a prospectus for the offer, Company C should take into account the Disclosure Illustrations.
Depending on the business activities of Company C and whether Token C is a
debenture, Company C may require a capital markets services licence for dealing in CMPs that are securities under the SFA, unless otherwise exempted.
Holders of a capital markets services licence are required to comply with
AML/CFT requirements under MAS Notice SFA04-N02.
Assuming Company C is not carrying on a business in any financial advisory
service in respect of Token C, the FAA will not apply.
Case study 4
Company D intends to offer Token D to any person globally, including in Singapore, for US$1 per Token D. Company D aims to achieve a relatively constant price for Token D by pegging its value to the US dollar. To do so, Company D will only accept payments for Token D in the form of electronic deposits of US dollars into its USdollar denominated bank account. These deposits will serve as a fiat currency reserve to back the purported US$1 value of each Token D in circulation. Holders of Token D will have the right to exchange Token D with Company D for US$1 per Token D. Company D will not have any rights to cancel or redeem Token D from token holders. Company D may consider future tie-ups with retail shops to enable Token D to be used to pay for purchases. Application of relevant laws administered by MAS in relation to Token D
As Company D is under an obligation to buy-back Token D from the holders,
Token D may constitute a debenture if Token D represents Company D’s indebtedness to the holder to pay back the holder US$1 per Token D.
If Token D is a debenture, Company D will need to comply with Prospectus
Requirements when it offers Token D, unless otherwise exempted under the SFA. When preparing a prospectus for the offer, Company D should take into account the Disclosure Illustrations.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 22

Company D should separately assess whether Token D or any of its activities fall
within the scope of the PS Act, and if so, Company D will be required to comply with the relevant requirements41. If Token D falls within the definition of “emoney” under the PS Act, MAS’ general regulatory stance is to not regulate Token D as a debenture. Case study 5 Company E plans to issue Token E on its platform, to allow investors to indirectly acquire bonds issued by Company F. This will be done pursuant to an arrangement where (i) a trust is constituted (with Company E as trustee) to acquire a bond from Company F; (ii) such acquisition is funded by the issuance of Token E; and (iii) the payments to holders of Token E are derived from payments received by Company E under the terms of Company F’s bonds (e.g. periodic coupon payments and principal payment on maturity). The trust is established solely for this purpose. Holders of Token E will have a debt claim against Company E, but not against Company F. Application of relevant laws administered by MAS in relation to Token E
Company E, as the issuer of Token E, will need to assess whether the tokenisation
arrangement results in the creation of a separate and distinct CMP from the bond issued by Company F, and if so, what type of CMP it is.
Based on the above arrangement, Token E is a separate and distinct CMP as it has
its own separate set of rights from Company F’s bonds. Token E is a debenture issued by Company E since token holders have a debt claim against Company E.
Accordingly, Company E will need to comply with the Prospectus Requirements
in respect of an offering of Token E, unless otherwise exempted under the SFA. When preparing its prospectus for the offer of Token E, Company E should also take into account the Disclosure Illustrations.
The Prospectus Requirements applicable to Company E are separate and distinct
from Company F’s obligations to comply with the applicable Prospectus Requirements relating to the bond (if offered in Singapore).
Company E, in facilitating the purchase or sale of Token E on its platform, may be
required to hold a capital markets services licence for dealing in CMPs that are securities under the SFA, unless otherwise exempted. 41 For specific unique cases where a token issuer believes that a token may fall within the definition of both a “capital markets product” under the SFA and a “digital payment token” under the PS Act, the token issuer may reach out to MAS with their assessment on the appropriate regulatory treatment of the token. Please refer to Appendix 2 when determining whether it is necessary to write to MAS on the issuance and to Appendix 3 for the information to be submitted to MAS when making the enquiry.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 23

Holders of a capital markets services licence are required to comply with
AML/CFT requirements under MAS Notice SFA04-N02.
Collective investment scheme
A digital token may constitute a unit in a CIS, where it represents a right or interest in a CIS, or an option to acquire a right or interest in a CIS. Case study 6 Company G intends to offer Token G to any person globally, including in Singapore. Company G will pool funds raised from the offer of Token G and use the funds to invest in shares in fintech start-up companies as well as in mining equipment or real estate for purpose of diversification (“Portfolio”). Company G will also manage the Portfolio. Holders of Token G will not have any powers relating to the day-to-day operations of Company G or the management of the Portfolio. Profits arising from the Portfolio will be pooled and distributed as payments to the token holders. The purpose of this arrangement is to enable token holders to receive profits arising from the Portfolio. Application of relevant laws administered by MAS in relation to Token G
The arrangement established by Company G in relation to Token G is likely to be
a CIS (“Arrangement”), and on this basis, Token G will be a unit in a CIS under the SFA.
Company G will need to comply with the Prospectus Requirements in respect of
an offering of Token G, unless otherwise exempted under the SFA. When preparing its prospectus for the offer of Token G, Company G should take into account the Disclosure Illustrations.
In addition, the Arrangement will be subject to the Authorisation/Recognition
Requirements (depending on whether the arrangement is constituted in Singapore or outside Singapore), unless otherwise exempted under the SFA.
Company G will also have to ensure that the Arrangement complies with all other
applicable requirements including investment restrictions and business conduct requirements under the SF(OI)(CIS)R and the Code on CIS, unless otherwise exempted under the SFA.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 24

Company G will likely require a capital markets services licence for carrying on
business in the regulated activity of fund management under the SFA, unless otherwise exempted.
Holders of a capital markets services licence are required to comply with
AML/CFT requirements under MAS Notice SFA04-N02.
Assuming Company G is not carrying on a business in any financial advisory
service in respect of Token G, the FAA will not apply.
Case study 7
Company H intends to issue Token H to allow investors to acquire fractional interests in the portfolio of physical gold which will be purchased by Company H, and receive profits from the subsequent sale of Token H based on capital gains from that gold. Company H will pool the funds raised from the offer of Token H and use the funds to purchase gold at its spot price. Company H will hold the gold on trust for holders of Token H and will manage the portfolio of gold. The holders of Token H do not have day-to-day control over the use of the funds raised, nor do they have the right to take possession or delivery of the gold. While Company H advertised Token H as not embodying any rights or value, in practice, a sale or purchase of Token H by an investor has the effect of selling or acquiring fractional interests in the portfolio of gold held by Company H. Application of relevant laws administered by MAS in relation to Token H
The characterisation of Token H requires a holistic assessment of the rights
attaching to or derived from the token within the arrangement, notwithstanding the advertisements made by Company H.
The arrangement established by Company H in relation to Token H as described
above (“Arrangement”) is likely to be a CIS. As Token H represents fractional interests in the Arrangement, Token H will likely be a unit in a CIS under the SFA.
Company H will need to comply with the Prospectus Requirements in respect of
an offering of Token H, unless otherwise exempted under the SFA. When preparing its prospectus for the offer of Token H, Company H should take into account the Disclosure Illustrations.
In addition, the Arrangement will be subject to the Authorisation/Recognition
Requirements (depending on whether the arrangement is constituted in Singapore or outside Singapore), unless otherwise exempted under the SFA.
Company H will also have to ensure that the Arrangement complies with all the
other applicable requirements including investment restrictions and business

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 25 conduct requirements under the SF(OI)(CIS)R and the Code on CIS, unless otherwise exempted under the SFA.

Company H may be required to hold a capital markets services licence for carrying
on business in the regulated activity of fund management under the SFA, unless otherwise exempted.
Holders of a capital markets services licence are required to comply with
AML/CFT requirements under MAS Notice SFA04-N02.
Assuming Company H is not carrying on a business in any financial advisory
service in respect of Token H, the FAA will not apply.
Case study 8
Company I is a Singapore-incorporated company with operations in Singapore. It intends to offer Token I to members of the public, but the offering will not be accessible by persons in Singapore. Company I will pool the funds raised from the offer and use the funds to invest in a portfolio of shares in fintech start-up companies. Company I will manage the portfolio of shares. Holders of Token I will not have any powers relating to the day-to-day operations of Company I or the management of the portfolio of shares. Profits arising from the portfolio of shares will also be pooled and distributed as payments to holders of Token I. The purpose of this arrangement is to enable token holders to receive profits arising from the portfolio of shares. Application of relevant laws administered by MAS in relation to Token I
The arrangement established by Company I in relation to Token I is likely to be a
CIS, and on this basis, Token I will be a unit in a CIS under the SFA.
However, as the offer of Token I will only be made to persons based overseas (i.e.
Token I will not be offered to any person in Singapore), Part 13 of the SFA will not apply to the offer.
Company I may nevertheless be carrying on the business of fund management in
Singapore, for example, if it operates the management of the portfolio of shares in Singapore. If so, Company I will require a capital markets services licence for carrying on business in fund management, unless otherwise exempted.
Holders of a capital markets services licence are required to comply with
AML/CFT requirements under MAS Notice SFA04-N02.
Assuming Company I is not carrying on a business in any financial advisory service
in respect of Token I, the FAA will not apply.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 26 Derivatives contract A digital token may constitute a derivatives contract, where a party to the contract or arrangement (such as the issuer of the digital token) is required to, or may be required to, discharge an obligation under the contract or arrangement at some future time, and the value of the token is determined (whether directly or indirectly, or whether wholly or partly) by reference to the value of one or more underlying things42. A digital token may also constitute a securities-based derivatives contract43, if it constitutes a derivatives contract of which the underlying thing is a security or a securities index. Case study 9 Company J intends to offer Token J, the price of which is determined by reference to the value of a share in Company Z which is listed in Singapore. Investors can make or lose money depending on whether the value of Company Z’s shares goes up or down. Holders of Token J do not acquire an ownership interest in the shares of Company Z. Company J also does not purchase and hold shares in Company Z on behalf of the investors. Instead, Token J provides its holder with the right to opt, at a future date, for Company J to purchase the token back from its holder at a price determined by reference to the value of Company Z’s shares at that future date. Application of relevant laws administered by MAS in relation to Token J

Token J may constitute a securities-based derivatives contract as its value is
determined by reference to the value of the underlying share in Company Z and Company J is obliged to purchase Token J back from an investor based on such value.
Company J will need to comply with Prospectus Requirements in respect of an
offering of Token J, unless otherwise exempted under the SFA. When preparing its prospectus for the offer of Token J, Company J should take into account the Disclosure Illustrations. 42 “underlying thing”, in relation to a derivatives contract, means (i) a unit in a CIS; (ii) a commodity (as defined in section 2(1) of the SFA); (iii) a financial instrument (as defined in section 2(1) of the SFA); (iv) the credit of any person; or (v) an arrangement, event, index, intangible property, tangible property or transaction that is, or that belongs to a class prescribed by regulation made under section 341 to be an underlying thing, but does not include any prescribed by regulations made under section 341 not to be an underlying thing. 43 “securities‑based derivatives contract” means any derivatives contract of which the underlying thing or any of the underlying things is a security or a securities index, but does not include any derivatives contract that is, or that belongs to a class of derivatives contracts that is, prescribed by regulations made under section 341.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 27

Depending on the business activities of Company J, Company J may require a
capital markets services licence for dealing in CMPs that are derivatives contracts under the SFA, unless otherwise exempted.
Holders of a capital markets services licence are required to comply with
AML/CFT requirements under MAS Notice SFA04-N02.
CASE STUDIES OF DIGITAL TOKENS THAT DO NOT CONSTITUTE CMPs OR MAY REQUIRE FURTHER ANALYSIS Illustrations of tokens that are unlikely to be caught within the scope of CMPs regulated under the SFA or the FAA, or require further analysis, are set out below. Please note that even if a token is not regulated under the SFA or FAA, compliance must be observed with all Singapore laws, such as the CDSA, the TSOFA, the UN Regulations, and the Personal Data Protection Act 2012, wherever applicable. Case study 10 Company K plans to set up a platform to enable sharing and rental of computing power among the users of the platform. Company K intends to offer Token K in Singapore to raise funds to develop the platform. Token K will give token holders access rights to use Company K’s platform. The token can only be used to pay for renting computing power provided by other platform users. Token K will not have any other rights or functions attached to it, and is not or is not intended to be, a medium of exchange accepted by the public, or a section of the public, as payment for goods or services or for the discharge of a debt. Company K intends to offer Token K to any person globally, including in Singapore. Application of relevant laws administered by MAS in relation to Token K
A holder of Token K will only have rights to access and use Company K’s platform,
and the right to use Token K to pay for rental of computing power provided by other users. Token K will not provide its holder any other rights or functions attached to it. Hence, Token K is unlikely to constitute a CMP under the SFA or an investment product under the FAA.
Company K’s offer of Token K will not be subject to any requirement under the
SFA or the FAA.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 28

Company K should separately assess whether any of its activities are otherwise
regulated under the PS Act.
Case study 11
Company L provides advisory services on the entire digital token offering process from pre-offering to post-offering. These services include reviewing whitepapers and suitability of concept and goals, introducing lawyers and developers, advising on token security protocol and post-offering delivery of tokens. Company L’s clients (“Clients”) are Singapore-incorporated companies that raise funds by offering Token L to support the development of the products and services that the Clients intend to offer. Company L has strict client selection criteria, and will only offer its services to Clients who issue Token L that can only be used in exchange for the products or services offered by the Clients without entitling the holder of Token L to receive payments of any kind from any person. Apart from redeeming the Client’s products and services, there are no other functions or rights attached to Token L. Company L does not provide legal advice on the application of Singapore laws to the token offerings. In addition, Company L does not advise on the risks or suitability of the token offeringsto investors or make any recommendations on which token offerings to invest. The services that Company L provide to investors of the tokens are operational in nature, such as conducting training and seminars on how to participate in the offerings, creation and encryption of wallets, and token transfers. Application of relevant laws administered by MAS in relation to Token L
Token L is unlikely to constitute a CMP under the SFA, as it can only be used to
redeem the Clients’ products or services.
Company L is unlikely to be conducting the regulated activity of advising on
corporate finance as its advisory services do not relate to the raising of funds involving securities, units in a CIS or specified securities-based derivatives contracts.
As Company L is not providing financial advice to the Clients or the investors of
digital token offerings, the FAA will not apply.
Company L should separately assess whether any of its activities are otherwise
regulated under the PS Act.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 29 Case study 12 Company M is planning to set up a digital payment token exchange platform that allows users to exchange digital payment tokens (such as Bitcoin) that do not constitute securities, derivatives contracts or units in a CIS, to fiat currencies. In its initial years of operation, the platform will be configured such that trading of digital tokens constituting securities, derivatives contracts or units in a CIS will not be allowed. This restriction may be lifted after a few years. Application of relevant laws administered by MAS in relation to Company M’s digital payment token exchange

On the basis that Company M’s digital payment token exchange will not allow
trading of any products regulated under the SFA, the SFA will not apply.
Company M should re-assess its position should it intend to allow users to trade
in any digital tokens that constitute securities, derivatives contracts or units in a CIS under the SFA. For instance, upon lifting the abovementioned restriction, Company M will likely be operating an organised market in relation to the trading of digital tokens that constitute securities, derivatives contracts or units in a CIS. On this basis, Company M will then need to be approved by MAS as an approved exchange or recognised by MAS as a recognised market operator under the SFA, unless otherwise exempted.
Company M should separately assess whether any of its activities are otherwise
regulated under the PS Act.
Case study 13
Company N plans to build a decentralised platform to collect user data on consumer spending on various e-commerce websites. This forms an ecosystem where retailers rely on consumer behaviour data to execute targeted advertisements. To fund the development of the platform, Company N intends to raise funds from investors through an offering of Token N. Token N only gives rights to investors to vote on features of the platform. There are no other rights attached to Token N. Company N will also distribute Token N as rewards to investors for participating in surveys on consumer spending. The amount of Token N to be rewarded to an investor is based only on his or her usage and activity on the platform, and not through further investment in the platform.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 30 Application of relevant laws administered by MAS in relation to Token N

Token N is not a share as it does not represent any legal or beneficial title in the
shares of any company. As the rewards are distributed in proportion to an investor’s usage and activity on the platform, it does not represent a right to claim dividends or return on capital.
Token N is not a debenture as it does not create or acknowledge debt on the part
of Company N.
Token N is not a unit in a CIS as there is no management of property by a manager
(“Scheme Property”), and investors are rewarded based on their participation on the platform with new Token N and not profits, income or other payments or returns relating to Scheme Property. Token N also does not involve pooling of contributions, or income or profits from which payments are to be made to the investors.
As Token N does not constitute a CMP under the SFA or an investment product
under the FAA, the requirements under the SFA or the FAA will not apply to Company N’s offer of or dealings in Token N. Case study 14 Ms. O, a prominent social media influencer, creates and issues Token O, based on a popular internet meme. Token O does not provide any rights and is chiefly issued for entertainment purposes, and its value is driven by demand and speculation. It has no inherent utility or functionality. It is also not a medium of exchange accepted by the public nor is it intended to be one. Application of relevant laws administered by MAS in relation to Token O
Token O is neither a CMP under the SFA nor an investment product under the
FAA so the requirements under the SFA and the FAA will not apply to the offer of or dealings in Token O.
Ms. O should separately assess whether any of her activities are otherwise
regulated under the PS Act.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 31 Case study 15 Company P wishes to issue Token P, which seeks to provide an immutable record of environmental impact reporting data relating to a green bond that Company P had previously issued. The chief purpose of Token P is to enhance transparency and data integrity as part of reporting practices applicable to the bond. Token P serves as a record of information and does not confer any rights to investors. It is also not used for any purpose in relation to the ownership and transfer of the green bond issued. Application of relevant laws administered by MAS in relation to Token P

Token P is unlikely to constitute a CMP under the SFA as it is intended to serve as
a data record of information relating to a green bond, and does not have any rights attached to it.
Similarly, it is also unlikely to constitute an investment product under the FAA.
As such, the requirements under the SFA or the FAA will not apply to the offer of
or dealings in Token P.
However, as the green bond issued by Company P constitutes a CMP under the
SFA, Company P will still need to comply with the Prospectus Requirements in respect of an offering of the green bond issued, unless otherwise exempted44 . Case study 16 Company Q intends to offer Token Q to any person globally, including in Singapore. Each Token Q represents a unique digital collectible character, with proof of ownership of the digital collectible character stored on the DLT network. Holders of Token Q do not have the right to sell Token Q back to Company Q but holders may sell Token Q on secondary marketplaces, including Company Q’s own marketplace. Company Q does not make any representation that monies used to purchase Token Q will be used to generate a profit or other benefit, or that the token should be bought because of an expectation that the price will increase. However, holders of Token Q may hold limited intellectual property rights to the underlying digital artwork. Holders of Token Q may also enjoy benefits such as memberships to online communities or receive tokens representing other digital collectible characters. Company Q may receive fees (e.g. royalties) for each secondary sale of Token Q. 44 To avoid doubt, the SFA provisions may be of relevance to Token P to the extent that data provided in Token P is for the purpose of fulfilling any disclosure obligations for the offering of the green bond.

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 32 Application of relevant laws administered by MAS in relation to Token Q

A holder of Token Q will only have limited intellectual property rights and benefits
such as memberships or further tokens representing digital collectibles. It will not provide its holder with any other rights or functions attached to it. Hence, Token Q is unlikely to constitute a CMP under the SFA or an investment product under the FAA.
Company Q’s offer of or dealings in Token Q will not be subject to any
requirement under the SFA or the FAA.
Company Q should separately assess whether any of its activities are otherwise
regulated under the PS Act.
Case study 17
Company R is incorporated and has its principal place of business in the United States of America. Company R intends to offer Token R to any person globally, including in Singapore. Token R is governed by a Simple Agreement for Future Tokens (“SAFT”) and is an “investment contract” (and therefore constitutes securities) under US laws (or the “Howey Test” 45). Token R will be tradeable in the secondary market on an over-the-counter basis or on third party cryptocurrency exchanges. Application of relevant laws administered by MAS in relation to Token R
The treatment of a token under the Howey Test is not a consideration for deciding
whether a token is a CMP regulated under the SFA.
The ability for a digital token to be traded on the secondary market alone does
not result in a digital token being construed as a CMP under the SFA.
Company R must separately assess whether its offer of Token R in Singapore
would comply with the securities law administered by MAS despite its assessment of Token R under US laws.
Company R should separately assess whether any of its activities are otherwise
regulated under the PS Act.
45 Securities and Exchange Commission v W. J. Howey Co. 328 U.S. 293 (1946).

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 33
Appendix 2
CRITICAL QUESTIONS (YES/NO)

Have I sought independent legal advice from a Singapore-qualified lawyer who
is familiar with MAS-administered laws?
(If ‘No’, please consider doing so before proceeding further.)
Is the structure of my proposed digital token or my proposed business model
similar to that described in the case studies?
(If ‘Yes’, no need to approach MAS.)
Do the rights and entitlements attached to the tokens in this case contain
characteristics and features of “capital markets products” under section 2(1) of the Securities and Futures Act 2001 or “investment product” under section 2(1) of the Financial Advisers Act 2001? (If ‘No’, no need to approach MAS.)
Are my activities subject to the regulatory requirements in Singapore pursuant
to the extra-territorial legislation in section 5 of this Guide?
(If ‘No’, no need to approach MAS.)

GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS MONETARY AUTHORITY OF SINGAPORE 34
Appendix 3
CHECKLIST
Please provide all the information below to MAS for the digital token offering enquiry. Case identification  Project name and token name  Issuer’s name, legal form, country of constitution, unique entity/identification number, address and website  Issuer’s contact(s), including names, emails, telephone numbers Offering details  Target start and end dates of offering  Target offering size, if any (optional)  Whether the offering will be accessible by any person in Singapore (Yes/No), and if ‘No’, reasons explaining how such access will be effectively blocked  Nature and scope of project to be funded by offering  Whether the token represents any value, function, rights or benefits (Yes/No respectively), and if ‘Yes’ to any of these, a detailed description of each  Whether fiat currency will be used to purchase the token (Yes/No), and if 'Yes', names of the fiat currency(ies) Documents  Terms and conditions of offering that will be executed and be legally binding on issuer and token holders  Whitepaper  Other relevant information e.g. screenshots of websites or social media showing information to be disseminated for the purpose of the offering  Legal opinion from a Singapore-qualified lawyer applying all relevant laws administered by MAS to the facts of the offering and of the issuer’s business. The opinion should cross-reference or cite specific clauses in accompanying supporting documents which are relevant.  Brief description of AML/CFT policies (if any) Specific issues for MAS to address  Specific actions sought from MAS, i.e. clarification on applicability of specific aspects of the law, application for licences, request for exemptions or waivers

Guide on the Tokenisation of Capital Markets Products

Lineage: In force