In June last year, the Monetary Authority of Singapore (the “Bank of Singapore”) launched a “regulatory sandbox” mechanism for financial technology companies, providing financial products with opportunities for “sandbox experiments”. Fintech companies participating In the case of prior filing, it is possible to develop businesses or products that conflict with current laws and regulations. Even if the relevant business is officially terminated, it will not be held accountable for related legal liabilities. This is equivalent to giving the selected company a firing range, which can train troops and sand table in real time to test more new products.
The regulatory sandbox currently targets P2P loans, Insurtech and payment technology testing (including blockchain technology), but there is not much interest in ICO products.
So will Singapore, like many heavily regulated countries and regions, only have an interest in blockchain technology, but don’t have a great liking for its derivative ICOs? Not necessarily.
Singapore has become one of ICO destinations overseas
What did the Bank of Singapore say about ICO?
On August 1, 2017, the Bank of Singapore MAS issued a public statement stating that it would supervise ICO activities involving the “Singapore Securities and Futures Act (SFA)”.
Here are the grudges between the SFA Act and the ICO for all captains.
If the nature of the ICO activity is the issuance of securities, it will fall within the scope of the SFA’s supervision and need to complete some prescribed procedures, such as submitting a prospectus. So the reason is very simple. Whether or not one’s own ICO is the subject of supervision depends on whether its attribute is a product defined in the Securities and Futures Act. Of course, there are exceptions. For example, small offerings, private placements and securities issued to accredited institutional investors will not be counted in the scope of SFA’s supervision.
It is worth mentioning that if the ICO does not fall within the scope of supervision, there is no need to go through the process of issuing securities, only the ICO white paper is sufficient. Moreover, the Singapore government does not impose rigid requirements on the content of the white paper. What should be written in it is determined by the issuer of the electronic token.
The content of a general white paper includes:
- What needs will the project solve?
- How much “money” (ie electronic tokens) is needed to undertake the project?
- How many electronic tokens will ICO sponsors keep for themselves?
- What types of currencies are accepted? And the specific charter and duration of the ICO event.
At the same time, there are no clear regulations on the nature, accuracy and completeness of the white paper information. It seems that Singapore is very confident that there will not be a crazy scene in its territory that can be fooled into getting rich overnight with a single white paper.
So, how does the Bank of Singapore want players to cooperate?
Precautions for ICO in Singapore
Such regulations are actually quite vague. Many products participating in ICO activities also include the two attributes of “product/service” and “securities investment”. If in the “ICO madness” period that is out of regulation, the issuer’s vigorous promotion of the value of electronic tokens is definitely the best marketing, but now players should consider how to highlight the “products and services” of the token issuance. Genes, this is the reason why Singapore releases ICO activities.
Looking at it this way, the supervision is indeed not very strong, and many Jianglong can still act on their own. After all, the types of digital tokens vary greatly, and whether their issuance or sale falls within the scope of supervision requires specific case analysis. Therefore, the HKMA recommends that all players (including intermediaries and trading platforms) should seek legal advice first, and don’t save it. Attorney fees are bad. [7.5 Degrees] The Singapore ICO Mythology TenX, which was interviewed exclusively, spent 5% of the funds on hiring a lawyer (poke me). As for the control of anti-money laundering and anti-terrorism financing, the Bank of Singapore has not yet clearly stipulated it. It just stated in its statement that these will be added in the future, and the scope of supervision will affect intermediaries.
The top priority of the entire statement is: as long as the issuing company of the electronic token is registered in Singapore, no matter where the ICO activity is located, it will be subject to the supervision of the Singapore government. Because the central bank of Singapore believes that the move to only place the issuance place overseas is a little bit “no silver three hundred taels here.” Obviously, it is not a good option to use Singapore as a soft persimmon to circumvent regulation.
I don’t know if I said too much all of a sudden and frightened players from all walks of life. The Bank of Singapore reiterated in Parliament on October 2nd: “The current supervision will focus on ICO activities involving company equity and securities laws. We have neither the will nor the power to intervene in legal investment behaviors such as the purchase of tokens by retail investors. However, this Council hopes that users can invest rationally and be vigilant against fraud and risks.”
South Korea and China have entered the “ICO regulatory period” Singapore and Japan are still waiting
Just as Iris Zhang, a partner of Uniblock, a domestic overseas company that started to develop an electronic token trading platform in Southeast Asia, said in an interview: “ICO investors are obviously more active than equity investors because it takes just a few months from participating in ICO to exiting the exchange. There is no need to wait patiently for many years like equity investment. This is more suitable for investors in Southeast Asia.” After the domestic ICO was silent, they chose to enter Southeast Asian markets such as Singapore and the Philippines. The company has been registered and the team building is basically completed.
Regarding entrepreneurial projects, Iris also expressed his concerns, “ICO is indeed a more efficient financing channel, but after the pleasure of financing for a while, it will be a long pressure, because it is not only necessary to develop the market on time, but also to develop the market and manage the market value, which challenges the team. Greatly improved. Most of the participants in the ICO are individual investors, and their ability to bear risks is much lower than that of investment institutions. The consequences of asset losses to individual investors will be very serious. Projects need to be aware of this before issuing an ICO.”
The Southeast Asian fashion e-commerce company iFashion succeeded in circumventing the supervision of external sales through the “product/service” attribute of its electronic token MegaX. According to its white paper, MegaX is mainly used for physical retail and e-commerce payments. For details, please poke that clothes sellers in Southeast Asia are also on the blockchain. ICO has become a new magic weapon for financing?
Their ICO just started on October 17th and lasted for one month. After the Bank of Singapore issued its August 1st statement, it has raised approximately US$2.1 million and completed two-thirds of the target. For them, ICO is A more efficient financing method. This is an example of “eating crabs” in Singapore, giving players who are coming to Singapore ICO a booster.
“Mining industry” big man Bitmain plans to relocate its headquarters from Beijing to Singapore and is recruiting locally. It seems that it is optimistic about the future of Singapore’s blockchain and its derivatives. If you want to know more, pay attention to the WeChat public platform (Asia7_5), and the backstage responds “boarding” to join the Fintech track expert group.