The Monetary Authority of Singapore (MAS) has been one of the more accommodating regulatory authorities when it comes to cryptocurrency and blockchain technology. It has been at the forefront of regulating this new market, choosing to not completely ban it as it understands the potential and the robustness of the technology involved.
In a further bid to regulate the market and warn gullible customers about the pitfalls, the MAS and the Commercial Affairs Department (CAD) have issued an advisory notice to the public regarding digital tokens, especially relevant given the recent proliferation of Initial Coin Offerings (ICOs).
In the advisory, the MAS and CAD have explained that digital tokens are issued as part of ICOs where the public are given tokens for investing in specific projects for which a white paper is issued.
These investments are taken in the form of BTC and ETH, and investors buy tokens in the hope that a given project will take off and become successful. If that happens, the value of the tokens is likely to go up and the investor would be able to make profits from his investment.
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Investors Advised to do Due Diligence
The CAD and the MAS have advised the public to perform due diligence and understand the benefits and the risks involved before they invest in any ICO. Since most of the operators of such ICOs are online and in a foreign country, it is very difficult to track such operators, find their profiles and recover invested funds in case something goes wrong.
Most ICO sellers do not have a proven track record and hence these ICOs are open to very high speculation, as investors and traders do not base their decisions on any fundamentals, investing purely with the intention of making a quick profit.
It is also possible that some of these ICOs could be used as a means for money laundering and terrorist financing, as they allow the collection and movement of large amounts of money within very short spans of time, without much regulatory tracking or control.
The MAS and CAD advise that it would be ideal if people and entities are registered with the MAS, as it would help tracking and regulation. They reiterate that the public have to be very careful and do everything possible to check and confirm their understanding of the digital coin and the ICO before they choose to invest in it.