Benefits and characteristics of Assetization or Tokenization (of assets) are in part I and II of this series. We also looked already in detail at STO in USA (II), since the US market displays strong interest and offers a large market-size. We also covered most of the EU in part III. The goal of this series is to show that in theory everything can be tokenized, tangible and intangible, as token embedded smart contracts serve the same function as traditional paper-contract, and to showcase different legislation in different jurisdictions. Token has certain advantages over paperwork, some obvious, some not, eg. automatization of renewals, improved security through distributed technology consensus mechanism, impossibility to tamper, convenient reconciliation and auditability, and many more.
Tokenized Offerings Asia Pacific
Tokenized Offerings Australia
The Australian Securities and Investments Commission published its Corporate Plan for 2018-2022 incl. “approach for applying the principles for regulating market infrastructure providers to crypto exchanges.” However, it is not clear whether this means the Principles for financial market infrastructures (PFMI) are applied to cryptocurrencies, ICOs or exchanges.
Tokenized Offerings Hong Kong
The Hong Kong Monetary Authority (HKMA) issued a circular to authorized institutions to draw their attention to the Basel Committee on Banking Supervision’s (BCBS) February 2018 paper on sound practices and the implications of Fintech for banks and bank supervisors. The HKMA recommends that authorized institutions study the paper carefully to understand the risks and opportunities brought by FinTech development. The HKMA is also studying the technical feasibility and merit of central bank digital currency (CBDC). However, there are no clear regulations on cryptocurrencies, ICOs or exchanges.
New rules, announced by the Securities and Futures Commission, will target funds that invest in digital currencies as well as the trading platforms on which these virtual currencies are traded. The new regime will ban retail investors from trading bitcoin via these funds or platform, but allow professional investors. One key stipulation will be that funds that invest more than 10 percent of their assets in virtual currencies will need to be licensed by the SFC.
Tokenized Offerings Japan
The Japanese Financial Services Agency (JFSA) published a draft report that outlines a new regulatory framework for crypto-assets and initial coin offerings. The report urges stakeholders to sign up for the qualified self-regulatory organization, the Japan Virtual Currency Exchange Association, which was accredited by the JFSA under the Payment Services Act in October. The report also indicates that specific tokens might be subject to regulation under the Financial Instruments and Exchange Act, depending on how they are structured, and proposes regulatory measures for “deemed dealers” (companies operating crypto-exchanges while their registration remains pending).
Tokenized Offerings Singapore
Singapore offers a balanced regulatory package for cryptocurrencies. Cryptocurrencies are allowed by the government, while the cryptocurrency exchanges and other crypto service providers merely have to be registered with local authorities. The Monetary Authority of Singapore (MAS) has created a Regulatory Sandbox environment that enables “financial institutions and FinTech players to experiment with innovative financial products or services in a live environment but with a well-defined space and duration.” Depending on the individual case, MAS provides regulatory support by relaxing, for a period of time, some of its requirements. The Inland Revenue Authority of Singapore (IRAS) has introduced the initial version of the “Electronic Tax Guide” regarding digital payments. This document is meant to establish the nature in which cryptocurrency transactions in Singapore will be taxed. The changes in taxing will come into effect on January 1st, 2020.
MAS and the Singapore Exchange published an industry report which explored the feasibility of DvP settlement of tokenized cash and securities (Singapore Government Securities) across separate blockchain platforms.
Tokenized Offerings Thailand
Recently, Thailand’s Securities and Exchange Commission (SEC) has reportedly approved the country’s first portal for initial coin offerings (ICOs). The SEC, Thailand’s primary regulator of the crypto industry, detailed that interested ICO issuers must first be approved by an ICO portal before applying for approval with the SEC. Besides institutions and high net worth individuals such as those with at least 70 million baht (~$2.21 million) worth of assets or at least 25 million baht of investments, venture capital firms and private equity funds can also invest. In addition, retail investors can invest up to 300,000 baht per ICO project.
Tokenized Offerings Philippines
The government has set up the Cagayan Economic Zone Authority which oversees a special economic zone that focuses on fin-tech and crypto-related businesses. In tandem, the Securities and Exchange Commission of the Philippines issued draft regulations around digital asset and token offerings and proposed rules for exchanges.
Tokenized Offerings Malaysia
Similar to those in Singapore, and is also working on adapting these to cover digital assets. However, more vague and lesser frameworks are developed: "The ministry has urged global authorities to formulate frameworks to tackle the issues raised by digital assets"....
Malaysia's Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) regulates both, digital assets and exchange platforms, stating that any digital assets offered as a form of investment or used as a method of fundraising are classified as securities in the country. The Securities Commission Malaysia (SC) updated its Guidelines on Recognised Markets to include regulatory requirements for digital asset exchanges. The ministry’s report also noted the Securities Commission’s initial coin offerings public consultation paper and its intentions to introduce formal guidelines in the near future.
>> Labuan International Business and Financial Centre (IBFC) and Labuan FSA on facilitating businesses in Malaysia and abroad to utilise the uniqueness of Labuan’s financial regulatory framework focusing on fintech startups, SMEs, growth and scalable companies that seek to tap on foreign investments and funds. No special license is required to operate an 'Innovative Financial Services' (IFS) related business in Labuan.
Tokenized Offerings Indonesia
The Indonesian government launched a new regulation that legalized cryptocurrency as tradable assets, allowing investors to trade digital currencies while protecting them from falling victim to crypto-fueled scams. Bank Indonesia reiterated its stance that virtual currencies, including Bitcoin, are not recognized as legitimate payment instruments.
Tokenized Offerings MENA
Tokenized Offerings United Arab Emirates
The Emirate of Dubai, in particular, appears intent on becoming a regional and global leader in the space. Banking, currency, and payment and settlement systems are regulated in the UAE by the UAE Central Bank.
The UAE Central Bank published the “Regulatory Framework for Stored Values and Electronic Payment Systems,” focusing on how “to facilitate robust adoption of digital payments across the UAE in a secure manner.”
Tokenized Offerings Oman
The Ministry of Commerce and Trade, Central Bank of Oman, the Capital Markets Authority acknowledge the opportunities within the space, however, no clear guidelines or framework has been established.
Tokenized Offerings Bahrain
The Central Bank of Bahrain recently issued a Regulatory Sandbox Framework Directive, providing a “virtual space” for FinTech startups and firms to test and experiment with their banking ideas and solutions.
Tokenized Offerings Saudi Arabia
Banking, currency and payment and settlement systems are regulated by the Saudi Arabian Monetary Authority (SAMA). The provision of cryptocurrency-related services falls within SAMA’s remit. SAMA has yet to issue any guidance or regulations.
...to be continued...
This is a six-part series. We also covered the benefits and characteristics of Assetization or Tokenization (of assets) are in part I and II of this series, most of the EU in part III, APAC and MENA in part IV.and the Caribbean in part V.
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