jakiro
Author: Zhang Feng
1. Singapore’s response to the global wave of tokenization
On November 14, 2025, the Monetary Authority of Singapore officially released the “Guidelines for the Tokenization of Capital Market Products (CMP)” (GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS), marking Singapore’s further deepening and systematization in the field of digital asset supervision.This document is a comprehensive upgrade of the 2017 “Digital Token Issuance Guidelines” and is designed to respond to the current trend of capital market product tokenization activities expanding from the issuance end to the entire chain of trading, custody, and clearing.With its consistent regulatory philosophy of “technology neutrality and substance over form”, Singapore has provided the most detailed regulatory blueprint for tokenization in the global capital market to date.
2. From “digital tokens” to “tokenization”CMP“The evolution of
MAS pointed out at the beginning of the “Guidelines” that since the release of the “Digital Token Issuance Guidelines” in 2017, tokenization activities have expanded from simple financing activities to the “full value chain of the capital market.”The so-called “tokenization” refers to the use of software programs to create digital tokens representing capital market products, which are usually deployed on programmable platforms such as distributed ledgers to achieve the recording and transfer of ownership.
This combination of technologies presents significant opportunities: CMPs can be digitally represented, decomposed, stored and exchanged, with the potential to improve transaction efficiency, enhance financial inclusion and unlock economic value.However, the application of DLT technology also brings uncertainty in the application of securities laws and may introduce technology-specific risks.MAS believes that it is necessary to update the original “Guidelines for the Issuance of Digital Tokens” to the “Guidelines for the Tokenization of Capital Market Products” to clarify the applicability of securities laws and other relevant legislation to the following two aspects: the issuance and sale of tokenized CMPs; and entity activities related to tokenized CMPs.
3. Technology neutrality and “same activities, same risks, same regulatory results”
The core principle of the “Guidelines” is “same activities, same risks, and same regulatory results.”MAS clearly stated that there is no difference in economic substance between tokenized CMP and non-tokenized CMP. The difference lies only in the form of expression (such as digital tokens on the DLT network vs. physical certificates or electronic records in centralized systems).Therefore, the regulatory focus is to examine the economic substance of digital tokens rather than their technical form.
What are “capital market products”?According to Article 2(1) of the Securities and Futures Law, CMP includes securities (including stocks, bonds, business trust units), collective investment plan units, derivatives contracts, spot foreign exchange contracts for leveraged foreign exchange transactions, etc.MAS emphasized in the “Guidelines” that to determine whether a digital token constitutes a CMP, its characteristics, intentions, structure and “bundle of rights” attached to or derived from the token should be comprehensively examined.
what forCMP，何为非CMP？Appendix 1 of the “Guidelines” details 17 cases under which circumstances digital tokens constitute CMPs such as stocks, bonds, CIS units, derivatives contracts, etc., and under which circumstances they do not constitute CMPs.For example:
Case 1: Token A, which represents the ownership of the company, constitutes a stock and is subject to prospectus requirements.
Case 2: Token B, which represents the right to lend to an entity, constitutes a bond, and the issuance platform needs to hold a capital market service license.
Case 6 & 7: Token G and Token H, which represent interests in a basket of assets (such as FinTech startup equity, gold), constitute a CIS unit and must meet both prospectus requirements and CIS authorization/recognition requirements.
Case 10: Token K, which is only used to pay for platform computing resource leasing, does not constitute CMP.
Case 14: Token O, a “meme token” with no actual rights and purely for entertainment purposes, does not constitute CMP.
MAS specifically emphasized that it deliberately avoids using labels such as “utility tokens”, “security tokens”, and “native/non-native tokens” to prevent regulatory arbitrage or misunderstandings in the industry due to labels.
4. Compliance path for the entire chain of issuance and sale
Prospectus and Exemptions.For tokenized CMPs constituting securities, securities derivatives contracts or CIS units, their public offering must comply with the provisions of Part 13 of the Securities and Futures Act, including the preparation and registration of a prospectus.However, the Guidelines also clearly list the following exemptions:
Small issue (not exceeding S$5 million within 12 months);
Private placement offering (no more than 50 people within 12 months);
For institutional investors only;
Open to qualified investors (certain conditions apply).
Information disclosure focuses on “tokenization characteristic risks.”The Guidelines require that the prospectus of a tokenized CMP must disclose information reasonably required by investors and their professional advisors, especially information related to the characteristics of tokenization.MAS lists the following categories of content that need to be disclosed in the Guidelines:
Tokenization features: Including underlying DLT technology type, smart contract governance, token minting/transfer/redemption/destruction process, key intermediary roles, etc.
Rights and Responsibilities: Including the rights attached to the token (whether it represents legal or beneficial ownership), the way ownership is recorded (on-chain/off-chain), the issuer’s right to modify or overwrite on-chain records, etc.
Escrow arrangements: Including token custody methods (self-custody, issuer custody, third-party custody), private key management process, custody arrangements for underlying assets (if any), etc.
Risk disclosure: Including technical and network security risks (such as smart contract vulnerabilities, network attacks, forks), operational risks (such as failure of third-party service providers), legal and regulatory risks (such as the uncertainty of the legal status of tokens under property law), custody risks (such as loss of private keys), liquidity risks, etc.
Distribution assurance: The complex product framework applies equally.Tokenized CMPs are subject to the same complex product framework as non-tokenized CMPs and must be classified as “complex” or “non-complex” products.Whether tokenized CMP is complex depends on the characteristics of the product itself, rather than its tokenized form.For example, tokenized stocks are often classified as non-complex products.
5. Intermediary activity license requirements and AML/CFT obligations
Licensing Requirements.The “Guidelines” clarify that entities engaged in activities related to tokenized CMP may be required to hold the following licenses:
Primary market platform operator.May engage in “regulated activities” and require a capital markets services license.
Trading platform operator.If the platform trades tokens that constitute securities, derivatives contracts or CIS units, it may constitute an “organized market” and require approval as a recognized exchange or recognized market operator.
Hosting service provider.If you have “control” over your client’s tokens (including control of the private keys or their shards), you may be required to hold a capital markets services license to provide custody services.
Financial Advisor.Entities that provide financial advisory services for tokenized CMPs are required to hold a financial advisor license or become an exempt financial advisor.
Anti-money laundering and counter-terrorism financing.MAS emphasizes that certain persons engaged in tokenized CMP-related activities must comply with the AML/CFT requirements in the relevant MAS notices, including:
Identify, assess and understand its ML/TF risks;
Develop and implement policies, procedures and controls related to customer due diligence, transaction monitoring, screening, suspicious transaction reporting and record keeping;
Take enhanced measures for high-risk situations;
Comply with requirements for tokenized CMP value transfer.
In addition, all personnel are subject to suspicious transaction reporting obligations under the Corruption, Drug Trafficking and Other Serious Crime (Confiscation of Proceeds) Act, as well as prohibitions under the Terrorism (Suppression of Financing) Act and United Nations Sanctions Regulations.
6. Cross-border application and regulatory sandbox
Applies across borders.The Guidelines clarify that even if the issuance or activity is partially conducted outside Singapore, the Securities and Futures Act may still have extraterritorial application as long as it has a “substantial and reasonably foreseeable impact” on Singapore.
Regulatory sandbox.MAS encourages companies that use technology in innovative ways to carry out regulated activities to apply for entry into the FinTech Regulatory Sandbox.MAS will relax certain legal and regulatory requirements during the sandbox period to provide testing space for innovation.But MAS also made it clear that the offering of tokenized CMP itself is generally outside the scope of the sandbox.
7. Regulatory paths in Singapore, the United States and Hong Kong
with the United StatesSECA comparison of regulatory philosophies.The U.S. SEC’s supervision of digital assets has long relied on the “Howey test” to determine whether tokens constitute an “investment contract” and thus are securities.SEC Chairman Gary Gensler has repeatedly emphasized that “the vast majority of tokens” should be governed by securities laws, but his latest speech has made it clear that investment contracts can be terminated and the legal nature of token assets may change.
The “Guidelines” of Singapore’s MAS provide a more structured analysis framework and rich cases. Its principles of “technology neutrality” and “substance over form” are similar in spirit to the “Howey Test” in the United States, but are significantly better than the latter in terms of operability and predictability.MAS made it clear in Case 17 that “the processing results under the Howey test are not factors to consider in determining whether a token is a CMP under the SFA,” highlighting its independent legal application position.
Comparison with Hong Kong’s regulatory framework.Since 2018, the Hong Kong Securities and Futures Commission has gradually established a regulatory framework for virtual assets through a series of statements, circulars and “Guidelines Applicable to Virtual Asset Trading Platform Operators”.In 2023, Hong Kong launched relevant guidelines for tokenized securities and tokenized securities regulatory-approved funds, allowing tokenized issuance under specific conditions.From 2024 to 2025, Hong Kong will continue to launch a tokenized asset sandbox and issue a digital asset policy statement to establish the direction of regularizing the tokenized issuance of government bonds.
However, compared to the Singapore Guidelines, Hong Kong’s framework:
The scope is relatively narrow,It focuses more on the dichotomy between “security tokens” and “non-security tokens” rather than comprehensively covering “capital market products”.
Case guidance is limited,It has not yet provided a case library as detailed as Singapore’s, and the industry still faces uncertainty in specific operations.
Insufficient coverage of the entire chain,The regulatory details for tokenized CMP in secondary market transactions, custody, clearing and other aspects still need to be clarified.
The issuance of Singapore’s “Guidelines” undoubtedly poses policy competition pressure on Hong Kong.If Hong Kong wants to consolidate its position as a global financial technology center, it may need to introduce an equivalent comprehensive framework as soon as possible that covers a wider range of CMPs such as tokenized securities, funds, derivatives, etc.
8. Guidance and future prospects for the industry
Clarify the compliance path and reduce regulatory uncertainty.The Guidelines provide the industry with clear compliance navigation through the principle of “technology neutrality” and a large number of cases.Issuers and intermediaries can rely on the Guidelines to determine whether their business constitutes regulated activities and what disclosure, licensing and conduct requirements they need to meet.
Emphasize “substance over form” and prevent regulatory arbitrage.MAS made it clear that its focus is on the “economic substance” of the token rather than its technical form or market label.This effectively prevents the avoidance of supervision through technical packaging and ensures fair competition in the market.
Encourage innovation and pay equal attention to risk prevention and control.Through the regulatory sandbox mechanism and continuous policy updates, MAS while leaving room for innovation, also emphasizes the comprehensive prevention and control of technical risks, operational risks, legal risks and custody risks.
9. Singapore’s Guidelines Wrinkle a Bay of Perfume River Water
The release of Singapore’s “Guidelines for the Tokenization of Capital Market Products” is a key step in building a “responsible digital asset ecosystem.”With its comprehensiveness, clarity and forward-looking nature, this document sets a new regulatory benchmark for tokenization in global capital markets.
In the face of Singapore’s aggressiveness, has Hong Kong felt the “spring cold” before the “spring river warms”?As another major international financial center in Asia, Hong Kong has made a good start in regulating virtual assets, but it still lags behind in the depth and breadth of tokenized traditional financial products.If Hong Kong can learn from Singapore’s experience and introduce a comprehensive framework covering all types of CMPs such as tokenized securities, funds, and derivatives as soon as possible, and provide the same detailed case guidance, it will be expected to form a twin-city pattern with positive interaction with Singapore in tokenization, a highland of future financial competition.Otherwise, the water of Xiangjiang River may not just be “wrinkled”.
