MAS UPDATE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS
Introduction
On 14 November 2025, the Monetary Authority of Singapore (MAS) released their Guide on the Tokenisation of Capital Markets Products (the “Guide”). The Guide serves as an update to MAS’s initial Guide on Digital Token Offerings, published in 2017 and updated in 2020. This article will cover the key aspects from the Guide and the capabilities that KGP Legal offers in respect to this area.
We have also written previous articles on Digital Token Regulations and Tokenisation Trends.
Key Updates
a. DIGITAL TOKEN AS CAPITAL MARKET PRODUCTS
The legal and regulatory requirements, based on current legislation, for capital market products (CMPs) that are tokenised and non-tokenised are essentially the same. The key issue is whether the digital token falls within the parameters of being a CMP under the Securities Futures Act 2001 (“SFA”), and if so, what type of CMP the digital token is classified as (e.g. security, collective investment scheme, or securities-based derivatives contract). For this, MAS adopts a “technology-neutral approach”, assessing the token in a holistic manner based on its characteristics, intent and structure, and bundle of rights attached to or derived from the token.
b. SECURITIES LAW REGARDING TOKENISED CMPs OFFERINGS
Under the SFA, offers of CMPs that constitute securities, securities-based derivatives contracts, or units in a collective investment scheme fall under the same regulatory regime regardless of whether they are tokenised or not.
MAS notes that an offer may be exempted from the regulatory requirements in certain situations. This includes:
- The offer is a small (personal) offer not exceeding SGD 5 million within any 12-month period, subject to conditions found in the Guidelines on Personal Offers;
- The offer is a private placement offer made to a maximum of 50 person within any 12-month period, subject to conditions pursuant to the SFA;
- The offer is made to institutional investors only; or
- The offer is made to accredited investors.
If the tokenised CMP falls outside these exemptions, the offeror would need to disclose all the information that investors and their professional advisers would reasonably require to make an informed assessment of the offeror and the product being offered. The Guide sets out some examples of material information that should be disclosed. This includes:
- The technologies underpinning the deployment of the tokenised CMP (e.g. type of distributed ledger technology (DLT), key intermediaries involved in the DLT);
- The rights and liabilities attached to the tokenised CMP (e.g. whether the token confers legal or beneficial title to the CMP, the rights of the issuer to amend or override records on the DLT network);
- The custody arrangement of the tokenised CMP and, if there are assets backing the tokenised CMP, the custody arrangement for those assets (e.g. whether it is held directly by the investor or by the issuer); and
- The risks related to the tokenised CMP (e.g. technology and cyber risks, operational risks, legal or regulatory risks, custody risks).
Additionally, the issuer must also assess whether their tokenised CMP constitutes a complex product (i.e. a Specified Investment Product) or non-complex product (i.e. an Excluded Investment Product). The same complex products framework apply to both tokenised CMPs and non-tokenised CMPs. Consistent with their technology-neutral approach above, MAS has noted in the Guide that the assessment will be based on the product-specific characteristics rather than the if the CMP is a digital token or not.
The Guide recommends seeking professional advice from qualified legal practitioners to assist in determining if the proposed product will fall within the ambit of a CMP under the SFA.
KGP Legal is well-versed and experienced in this area, having advised a wide range of clients in determining whether their product will be deemed a CMP or not, and if so, the type of CMP and the necessary regulations it must comply with.
c. LAWS REGARDING OTHER TOKENISED CMP ACTIVITIES
Besides the issuer or offeror, the Guide also notes that intermediaries or service providers related to the tokenised CMPs may also require the relevant license from MAS to provide their service. The Guide lists out four examples of this:
- Persons operating a primary market platform on which one or more offerors of tokenised CMPs may make primary offers or issue tokenised CMPs;
- Persons operating a trading platform on which tokenised CMPs are traded;
- Persons providing custody services of tokenised CMPs; and
- Persons providing financial advice in respect of tokenised CMPs.
In addition, the Guide emphasises that the requirements on anti-money laundering and countering the financing of terrorism (AML/CFT) would also apply to such persons.
Accordingly, unless exempted, persons who carry out any of the above activities would need to get a license issued by the MAS to operate in Singapore and demonstrate compliance with the relevant regulations.
d. EXTRA-TERRITORIALITY
Notably, the Guide highlights that the SFA and Financial Advisers Act 2001 may still apply even where activities are conducted partially in Singapore, or even outside of Singapore entirely but having substantial and reasonably foreseeable effect in Singapore.
e. MAS’ FINTECH REGULATORY SANDBOX PROGRAMME
Lastly, the Guide also promotes the MAS’ FinTech Regulatory Sandbox Programme (the “Sandbox Programme”). Approved applications to the Sandbox Programme would mean the relaxing of specific legal and regulatory requirement prescribed by MAS for the duration of the sandbox.
We have previously written a piece on the Sandbox Programme, published in the Legal 500.
How we can help
Therefore, with the issuance of the Guide, Singapore has maintained its position as a forward looking and flexible global financial hub that is open to new technologies while ensuring sufficient guardrails in the form of AML/CFT requirements to protect consumers and investors.
KGP Legal have lawyers with deep knowledge in this area and are confident in helping you explore this new and exciting avenue while ensuring compliance with the relevant laws and regulations.