All Token Issuers Must Comply with Regulatory Requirements: Monetary Authority of Singapore
If anything is clear from the first month of the new year, it is the fact that there is no skirting around regulations for token issuers. With the wave of regulatory guidelines released by countries such as Malaysia, Thailand and Japan, token issuers have to toe the line.
Recently, a token issuer learnt this lesson the hard way when the Monetary Authority of Singapore (MAS) warned them to not go ahead with their token sale until they conform to the regulations under the Securities and Futures Act (SFA).
The unnamed Initial Coin Offering (ICO) project seemed to have inadvertently flouted the advertising restriction under the SFA for token issuers who opt for an exemption from prospectus registration with MAS. The MAS allows issuers to make an offer of securities without registering the prospectus, subject to certain terms and conditions, such as not advertising the offer. However, in this case, the issuer put out a LinkedIn post, which was a breach of the regulatory guidelines. The project has suspended its security token offering after the MAS warning.
More countries are heeding Singapore’s route and establishing clear framework for regulating this nascent industry. The latest entrant is the United Kingdom (UK), which has released a consultation paper titled ‘Guidance on Cryptoassets’ to set a framework for establishing clear regulatory guidelines. This Consultation period is scheduled to have a deadline of April 5, 2019, after which the country will issue final guidelines for cryptocurrencies and ICOs. The UK’s financial regulator Financial Conduct Authority (FCA) aims to remove the regulatory ambiguity for token issuers.
What’s the Takeaway for Token Issuers?
Traditional ICOs from 2017 did not pay enough attention to the legal aspects of their token sale. Token issuers now, especially those intending to launch Security Token Offerings (STOs), need to comply with securities laws across jurisdictions. Unlike ICOs, STOs mirror products from the traditional financial industry more closely, bringing them under the purview of a lot of existing laws.
With ICOs and STOs in 2019, legal compliance has become as important as tokenomics and technology.
However, this is not to suggest that regulations are an impediment to the growth of the token economy. In fact, clear legal guidelines can go a long way in conducting a smooth and efficient token launch process. The very fact that token issuers are allowed to make an offer of securities without registering a prospectus under certain terms and conditions shows that regulators are being flexible. The regulatory certainty behind STOs also make it a much more comfortable avenue for retail investors to participate in. It is up to the token issuers to perform their due diligence and ensure that they toe the line.
So, if you are a token issuer looking to launch an ICO or STO, make sure that you work with a partner who understands the legal aspects of a token sale. The service provider should be able to help you draft and review legal documents for compliance and also offer coordination services for your legal needs. Choosing the right launchpad for your ICO/STO can go long way towards building your dream project.
About ICOMain.io:
ICOMain.io is a full-service solutions provider for all the things needed to complete a successful ICO. Our comprehensive solutions are designed for companies looking to tap into the immense potential of blockchain and launch their ICO in the most efficient manner possible. Our team comprises of seasoned experts who have a wealth of experience in advising ICOs and is complemented by our cutting-edge technology infrastructure. We are dedicated to understanding their clients’ needs who may come from a diverse range of industries. We are also the first sponsor firm for the Gibraltar Blockchain Exchange (GBX) that aims to be a world-leading, institutional-grade token sale platform and cryptocurrency exchange.
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