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Initial Coin Offering in Singapore

Initial Coin Offering in Singapore

Blockchain technology can be used by Singapore companies seeking to gather funds through initial coin offerings, also known as ICOs. This way, Singapore is now one of the most popular locations in the world for the issuance of ICOs. Our Singapore company formation agents can offer a definition of initial coin offerings. We can also help you register a company in order to launch an ICO in Singapore.

Quick Facts
Special legislation available (YES/NO) No, however, the Monetary Authority of Singapore (MAS) issued special regulations on e-tokens

ICO company registration requirement (YES/NO)

YES, the investor must register a company to launch an ICO (private companies are usually preferred)

Steps to launch an ICO

Create the ICO, register a company with ACRA, draft a white paper on the ICO, obtain a license with the Monetary Authority
Special authorization requirements (YES/NO)

YES, with the MAS

Types of investors ICOs address (professional/non-professional) Professional and non-professional investors
Licensing requirements

YES, with the MAS for selling digital coins on cryptocurrency platforms

Authorized financial advisor requirement (YES/NO)

YES, licenses must be obtained under the Financial Advisors Law
Intermediaries accepted as ICO providers Persons/companies issuing virtual money, persons/companies trading cryptocurrencies, persons/companies offering financial advice
Requirement to respect Anti-Money Laundering Regulations (YES/NO) Yes
Activities allowed for
ICO providers
Fundraising, technology, business or asset investments, e-payment services
Possibility for foreign providers to enter the Singapore market (YES/NO) Yes
Special tax regulations applicable to ICOs Taxation occurs based on the type of
e-token and if the income obtained from it goes in or outside Singapore. Tax residency rules also apply.
Advantages offered by Singapore to ICO investors Established reputation as a financial hub in Southeast Asia, modern financial infrastructure, the existence of special regulations issued by MAS

For a while now, cryptocurrencies have become popular all over the world. The same happened to startup companies which have started to grow in numbers in countries with a developed Internet infrastructure. Singapore is one of the countries where the use of blockchain technology for the creation of cryptocurrencies is quite common nowadays.

ICOs and digital tokens in Singapore

Initial coin offerings are the easiest way of raising money through private projects not only in Singapore, but also in other countries around the world. There are several methods through which initial coin offerings can be used to raise money and the most popular ways of doing that in Singapore are:

  1. by creating a project through which a Singapore company issues digital tokens which are sold to the public;
  2. by entering a joint venture with one or more investors who launch the initial coin offering;
  3. by creating an application through which the digital token offered to the public is promoted;
  4. by creating cryptocurrency stock exchanges which work like the Singapore Stock Exchange;
  5. by setting up a start-up company for which special programs have been enabled by the government;
  6. by creating crowdfunding platforms where digital tokens are sold to local and foreign investors.

The main instrument used for an initial coin offering in Singapore will be the digital token which can be represented by popular cryptocurrencies such as Bitcoin and Ethereum or newly launched tokens.

No matter the option of the investor, we can help them open a company in Singapore with the purpose of creating an ICO.

We invite you to watch our video on ICOs in Singapore:

Legislation related to initial coin offering in Singapore

Not long ago, the Monetary Authority of Singapore (MAS) has announced several guidelines for the issuance of initial coin offerings by local companies. However, it is important to notice that the MAS has not adopted yet specific regulations which give Singapore ICOs a legal framework to follow.

The current guidelines provide for ICOs to be digital coins or tokens which comply with the Securities Futures Act. In other words, the cryptocurrency to be issued must enter one of the following categories which can be marketed as:

  • – shares in a company;
  • – debentures;
  • – units in collective investment schemes (CIS).

Our company registration specialists in Singapore can offer detailed information on the Securities Futures Law which regulates ICOs at the moment.

We also invite you to read more about ICOs in our infographic below:

ico in singapore

How to set up an ICO in Singapore

The first thing to know is that ICOs can only be issued by private companies in Singapore. This is the main difference between initial public offerings (IPOs) which are issued by public companies and ICOs which can be only be issued by private companies.

The first step to issue an ICO in Singapore is to register a company with ACRA. Following that, the business can create the cryptocurrency which will be traded in order to obtain funds for the future development of the company. No license is necessary for the issuance of ICOs at this point, however the MAS will review the digital tokens before being issued.

What are the main steps of launching an ICO in Singapore?

Both local and foreign investors can create virtual money which they can market by launching initial coin offerings in Singapore, however, it is important to consider a few aspects which enable the platform to run legally.

The main steps for launching an initial coin offering in Singapore are:

  • – create a digital token or use a popular one and a marketing plan of the platform it will be sold on;
  • – register a company with the Singapore Accounting and Corporate Regulatory Authority;
  • – create a white paper in which the goals of the initial coin offering are thoroughly explained;
  • – apply for the necessary licenses with the Singapore Monetary Authority if the digital token falls under the rules of the SFA;
  • – create a platform (website) or register with a platform where ICO projects are promoted.

Foreign investors who want to relocate to Singapore in order to create initial coin offerings are advised to check all the requirements in this industry with the Monetary Authority or our company registration agents who can explain the regulations they need to comply with.

If you want to know the quickest way to setting up a company in Singapore, it is advised to consult our company formation representatives, who can provide thorough information regarding the registration of each type of legal entity, when deciding which choice suits you. Additionally, we can help you with company registration process no matter the entity you decide on.

How do ICOs work in Singapore?

There are two important players in an initial coin offering, the first one is the issuer who is represented by the Singapore company promoting the project or projects the offering was created for and selling the virtual currency. The issuer is required to create a white paper in which the following points need to be explained:

  • – information about the project and the legal terms of the platform;
  • – the commercial terms under which the virtual token is sold;
  • – information about the issuer;
  • – information about the other parties involved in the project;
  • – the stage of the project and its main goal.

The investor can purchase the virtual money in exchange for participations in the project, shares or other debentures, in accordance with the commercial terms of the ICO. It is advisable for both issuer and investor to have electronic wallets for simplifying the transactions.

If you need assistance in setting up an ICO, our local advisors can help if you want to open a company in Singapore for this purpose.

The main difference between ICOs and IPOs in Singapore

Many investors wonder what the main differences between ICOs and IPOs are. Even if in functionality, they work the same, the differences between the two types of undertakings are quite important. First of all, the ICO does not fall under specific regulations and licensing requirements, compared to the IPO. Then, the ICO is appropriate for start-up companies compared to the IPO where the company needs a track record while undergoing a serious verification by the MAS, therefore launching an ICO is easier than creating an IPO.

Our Singapore company formation consultants can offer detailed information and assistance on the regulations to comply with when creating an initial coin offering.

If you are interested in setting up a fintech startup with the purpose of issuing ICOs, please contact our Singapore company formation consultants for assistance.