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The Monetary Authority of Singapore, the financial regulator for Singapore, has issued new guidance on how it plans to regulate initial coin offerings. This is really a follow up to an earlier statement regarding how it plans to regulate ICOs, which it issued back in August.

Monetary Authority of Singapore’s important ICO statement

The Monetary Authority of Singapore (MAS) said that ICOs would likely fall under the auspices of its existing securities and futures regulations. This includes a requirement that any initial coin offering in Singapore be accompanied by a prospectus that is prepared in accordance with existing regulations and registered with the MAS. This brings initial coin offerings in Singapore in line with the issue of shares in other sorts of Collective Investment Schemes.

Not only that, but the Monetary Authority of Singapore also said that persons operating what it calls “a primary platform” in Singapore in relation to digital tokens, may fall under its regulatory laws and will therefore need to be fully regulated and acquire the appropriate license from the MAS.

Individuals who are providing financial advice in relation to digital tokens, ICOs and crytocurrencies in Singapore will also need to be authorized to be able to do so.

Ravi Menon, the Managing Director of the Monetary Authority of Singapore, was speaking at the Singapore Fintech Festival this week, and had this to say:

“MAS does not regulate virtual currencies; in fact we welcome them as an innovation that can potentially reduce the cost of financial transactions. But we regulate the activities that surround virtual currencies if these activities pose specific risks.”

Why the Monetary Authority of Singapore statement is important

There is now a proliferation of ICOs, hitting the market from all sorts of directions. While some cryptocurrencies like Bitcoin and Ethereum are now well established, others are not, and look entirely like the opportunities money spinning schemes they are.

Consumers, keen to be in at the start of what they believe could be the next Bitcoin, are piling into ICOs in droves, in Asia and around the world. Regulators are becoming increasingly concerned, hence the MAS statement. While politically Singapore does not want to be seen as ‘regulating’ cryptocurrencies, as it sees itself as a hub of technological and financial innovation, at the same time the MAS sees the risks, and is therefore looking to ensure there is regulation of the activity around initial coin offerings.

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This means people promoting and dealing in ICOs may well fall under the aegis of the MAS, which will restrict such activity to financial professionals.

Financial regulators also talk to each other and watch each other closely: other responsible jurisdictions will be moving to make clear what their stance is very soon. If there is one threat that looms larger than any other over the price of Bitcoin, it is that there will be a regulatory backlash against cryptocurrencies. Bitcoin itself may not be the focus of such a backlash, but it will be sufficient to drive the price down as buyers lose heart.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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