Singapore Halts Security Token Offering For Regulatory Breach

Asia Regulations Security Tokens Singapore

The Monetary Authority of Singapore has warned an STO project not to proceed with its token offering until it fully complies with regulatory requirements under the Securities and Futures Act.

The Monetary Authority of Singapore (MAS), the country’s central bank and chief financial regulator, has warned a security token project to halt its planned Security Token Offering (STO) until it complies with regulations.

According to a press release issued on Thursday, Jan 24, the MAS warned the unnamed STO project not to proceed with its token offering until it fully complies with regulatory requirements under the Securities and Futures Act (SFA).

The MAS went on to highlight how the STO had breached regulations by advertising its token offering on LinkedIn, thereby making it subject to the condition that it must register a prospectus with the financial regulator.

“The issuer had intended to rely on an exemption under the SFA, which allows an issuer to make an offer of securities to accredited investors without registering a prospectus with MAS. The exemption from prospectus registration is however subject to certain conditions, including a requirement not to advertise the offer,” noted the press release.

“The issuer in this case failed to comply with the advertising restriction when its legal advisers put out a LinkedIn post accessible to the public calling attention to the offer. As such, the issuer would not be able to rely on the exemption from prospectus registration. Following MAS’ warning, the issuer has suspended its global offering of securities tokens,” it continued.

Mr Lee Boon Ngiap, MAS Assistant Managing Director (Capital Markets) said: “Where an offer is made to the public, a prospectus is required to ensure that investors are provided with all the information to make informed investment decisions. Some offers may be made without a prospectus if they are limited to a restricted group of persons or to those who have the means to look after their own interests. Such offers are subject to strict conditions such as advertising restrictions. MAS will not hesitate to act if issuers contravene the disclosure requirements under the SFA.”

The MAS reiterated that all digital token issuers in Singapore offering securities tokens must comply with the applicable securities laws, including the requirement to register a prospectus with MAS, and repeated its standard warning about the risks of investing in crypto projects.

“Consumers should ensure that they understand the benefits and risks of any product or service before parting with their monies. Specifically, for digital token offerings, the risks include a highly speculative valuation, heightened risk of fraud and lack of a proven track record. This makes it difficult for investors to establish the credibility of the offerings,” it said.

About the author

Mark Knowles

Mark Knowles

Coinlaw Multi-Jurisdiction Blockchain News
Mark Knowles is the Executive Editor of coinlaw.io
With more than a decade of experience as a journalist and editor, Mark has now turned his focus to the blockchain and cryptocurrency revolution that is currently reshaping the global economy. As Executive Editor at Coinlaw Mark is working to create a website that is a hub for the international crypto community to find the latest legal news, legislative changes and expert opinion from across the industry. Contact him at [email protected] or through mobile on +66 (0) 98 705 2716.

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