The latest compliance issues in wealth management in Asia-Pacific.

Monetary Authority of Singapore
The Monetary Authority of Singapore has warned an initial coin offering issuer to halt an offering until it fully complies with local rules.

ICOs are a meld of crowdfunding and an initial public offering (IPO) used by blockchain companies to raise funds. Instead of shares in a company, investors in ICOs are rewarded with a new cryptocurrency or digital token whose value is tied directly to the issuing company’s performance.

The issuer, which the regulator did not identify by name, “had intended to rely on an exemption under the Securities and Futures Act, which allows an issuer to make an offer of securities to accredited investors without registering a prospectus with MAS”.

MAS said that this exemption from prospectus registration is, however, subject to certain conditions, including a requirement not to advertise the offer. The issuer in this case failed to comply with the advertising restriction when its legal advisors put out a LinkedIn post accessible to the public calling attention to the offer.

“Consumers should ensure that they understand the benefits and risks of any product or service before parting with their monies. Specifically for digital token offerings, the risks include a highly speculative valuation, heightened risk of fraud and lack of a proven track record. This makes it difficult for investors to establish the credibility of the offerings,” MAS said.

A number of regulators have moved to issue guidance on how they intend to oversee ICOs. Switzerland’s FINMA, for example, set out its approach a year ago. FINMA said financial market law and regulation is “not applicable to all ICOs”, and that “circumstances must be considered on a case-by-case basis” as “there is no ICO-specific regulation, nor is there relevant case law”. In 2017, China banned ICOs.