Singapore
Answer ... There is no legal definition of ‘cryptocurrencies’ and/or ‘virtual currencies’.
In general, cryptocurrencies and/or virtual currencies may fall within the definition of one or more of:
- a ‘capital markets product’ under the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), defined as any securities, units in a collective investment scheme, derivatives contracts, spot foreign exchange contracts for the purposes of leveraged foreign exchange trading or other products prescribed by the MAS;
-
‘e-money’ under the the Payment Services Act 2019 (the “PSA”), defined as any electronically stored monetary value that:
-
- is denominated in any currency or pegged by its issuer to any currency;
- has been paid for in advance to enable the making of payment transactions through the use of a payment account;
- is accepted by a person other than its issuer; and
- represents a claim on its issuer; and/or
-
a ‘digital payment token’ under the PSA, defined as any digital representation of value that:
:
-
- is expressed as a unit;
- is not denominated in any currency and is not pegged by its issuer to any currency;
- is, or is 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; and
- can be transferred, stored or traded electronically; and
- satisfies such other characteristics as the Monetary Authority of Singapore (the “MAS”) may prescribe.
Therefore, depending on the nature of the cryptocurrency and whether it falls within one or more of the categories above, the corresponding legislation would apply. For example, the issuance and/or dealing in a cryptocurrency which is a ‘capital markets product’ would likely give rise to licensing and/or prospectus registration obligations under the SFA, while the dealing in or facilitating the exchange of a cryptocurrency that is a ‘digital payment tokens’ would likely give rise to licensing obligations under the PSA.
Singapore
Answer ... Depending on how the relevant entity is regulated, e.g. as a capital markets service provider under the SFA, or a payment services provider under the PSA, such entity would have to comply with the relevant anti-money laundering and countering the financing of terrorism (“AML/CFT”) notices issued by the MAS.
The general AML/CFT obligations under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, Chapter 65A of Singapore, the Terrorism (Suppression of Financing) Act, Chapter 325 of Singapore, and the relevant United Nations regulations) will also apply.
Singapore
Answer ... Generally, the MAS has forewarned in a media release dated 19 December 2017 that there is a high degree of risk when dealing with cryptocurrencies. In particular, many operators of platforms that deal in cryptocurrencies do not have a presence in Singapore, which makes it difficult to verify their authenticity or credibility, and there is greater risk of fraud when investors deal with entities whose backgrounds and operations cannot be easily verified. Further, if a cryptocurrency intermediary is found to have used cryptocurrencies illegally, its operations could be abruptly shut down by law enforcement agencies. There is also a risk that a cryptocurrency intermediary may be the target of cyber hacking, which may result in loss if personal funds or digital tokens are held by such an intermediary.
However, it should be noted that the general consumer protections do apply under the Consumer Protection (Fair Trading) Act, Chapter 52A of Singapore, as well as the usual claims under contract and tort law.
Singapore
Answer ... Tax resident individuals in Singapore would be happy to note that there is no capital gains tax applicable in Singapore, and therefore there is no need for onerous accounting for the purposes of cryptocurrency investment.
Businesses that choose to accept cryptocurrencies are subject to normal income tax rules. Therefore, such businesses will be taxed on the income that is derived from or received in Singapore. Where businesses use or accept cryptocurrencies as payment for goods and services, they should record the sale or purchase based on the open market value of the goods or services in Singapore dollars or, if such value cannot be determined, then based on the rate of exchange of the cryptocurrency at the time of the transaction.
Businesses that derive a profit from buying and selling, or mining and trading, cryptocurrencies will be taxed on such profits. The distinction between trading and capital gains will depend on the specific factual matrix of each case. Broadly speaking, an entity may be considered carrying on the business of a certain activity if it does so with sufficient system, repetition and continuity, regardless of whether there is any profit.
Singapore
Answer ... There are no regulatory requirements for persons trading in their personal capacity.
The regulatory requirements for a cryptocurrency exchange will depend on whether the cryptocurrencies available for trading may be construed to be ‘capital markets products’ under the SFA or ‘digital payment tokens’ under the PSA. Other regulatory requirements may also apply if the cryptocurrency in question bears characteristics of other regulated instruments. For example, if a cryptocurrency represents an underlying commodity and physical delivery is due as a result of a trade, this may be construed as ‘spot commodity trading’ under the Commodity Trading Act, Chapter 48A of Singapore.
Consequently, if a cryptocurrency exchange makes available for trading cryptocurrencies that are construed to be ‘capital markets products’ under the SFA, or carries on the business of dealing in such ‘capital markets products’, it will likely need to be approved or recognised as an exchange or market operator, respectively, or licensed as a capital markets service provider with the MAS. If a cryptocurrency exchange makes available for trading cryptocurrencies that are construed to be ‘digital payment tokens’ under the PSA, it will likely need to be licensed as a digital payment token services provider with the MAS.
In relation to AML/CFT obligations, an MAS regulated entity would have to comply with the specific AML/CFT notices issued by the MAS. General AML/CFT obligations under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, Chapter 65A of Singapore, the Terrorism (Suppression of Financing) Act, Chapter 325 of Singapore, and the relevant United Nations regulations) would also apply.
Singapore
Answer ... Foremost, note that there is no statutory definition of ‘initial coin offerings’ or ‘securities token offerings’ under Singapore law.
It should also be noted that the category of ‘capital markets products’, being regulated financial instruments in Singapore, is not limited to ‘securities’ (which refer, broadly speaking, to equity and debt instruments only). Units in a collective investment scheme, or derivatives contracts, also fall within the category of ‘capital markets products’, which are also regulated financial instruments. Accordingly, although the colloquial industry term, ‘security token offering’ is often used, it should be noted that an offering of units in a collective investment scheme or securities-based derivative contracts (i.e. not only ‘securities’) in Singapore would also be regulated as an offer of investment under the SFA, which would likely give rise to prospectus registration and/or licensing obligations under the SFA.
It follows, therefore, if an ‘initial coin offering’ (in contrast to a ‘security token offering’) relates to the issuance of a digital token that is not a ‘capital markets product’ under the SFA, the SFA will not apply. A common example of this would be ‘utility tokens’, which are digital tokens that can be used to exchange for certain goods and services.
Regardless of the nature of the offering, the general AML/CFT obligations under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act, Chapter 65A of Singapore, the Terrorism (Suppression of Financing) Act, Chapter 325 of Singapore, and the relevant United Nations regulations) will also apply.