Singapore regulators’ consumer advice on digital tokens investment projects


nnnThe Singapore Monetary Authority (MAS) has published a new article on its digital tokens on its website, along with the Singapore Department of Commerce’s Business Department (CAD), to analyze this current very hot investment activity , To provide consumers with some suggestions, stressed that this investment has a lot of risk, to advise consumers to participate in the project before the full understanding of the project and a comprehensive consideration.n
nnTranslated by: Inan
nThe Singapore Department of Commerce (CAD) and the Singapore Monetary Authority (MAS) have observed ICO and other digital tokens in Singapore. They advise members of the public to conduct due diligence to understand the risks of ICO and digital tokens.n
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nWhat is the digital tokens?n
nA digital token is an encrypted security representation of the token holder’s interest or the right to perform a specified function. Virtual currency is a special type of digital tokens. Virtual currency is usually used as a means of purchasing goods or services, examples of which include Bitcoin and Taitong coins.n
nHowever, the function of digital tokens has gone beyond the virtual currency. For example, these digital tokens may represent the ownership or security interests of the denominator’s assets or property, or may represent the debt owed by the seller. This digital tokens have already entered the market as an investment opportunity.n
nHow does the ICO and investment plan involving digital tokens work?n
nDigital tokens can be provided through ICO or other investment projects. The digital tokens provided through the ICO are usually unique to the seller, which can be sold to consumers in exchange for a wider range of virtual currencies (such as Bitcoin, Taitong) or cash. These sellers often present their business plans in their online “White Paper”.n
nICO and other investment projects involving digital tokens can be presented in a number of ways through different business claims. For example, they may seek to develop a new digital platform. Others may provide opportunities to invest in real estate, business and assets, or promise to bring certain benefits or economic returns to consumers.n
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nWhat risks should consumers pay attention to?n
nConsumers should pay attention to the understanding of the product. If the seller of the digital tokens is reluctant to emphasize the risk, then the consumer should try to find more information about the underlying project, business or asset. The following emphasis on the risk worth thinking, but not exhaustive.n
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nInvolving foreign and online operatorsn
nInvestments are faced with high fraud risk when investing in projects that run online or abroad. Since these operators are not in Singapore, it is difficult to verify their authenticity. If the project abortion, it is difficult to track its operators. The recovery of investment funds may also be subject to foreign laws and regulations, these regulations may be different from Singapore.n
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nSellers do not have reliable track recordn
nDigital tokens sellers may not have reliable performance records, making it difficult for consumers to build trust. As with all start-ups, the failure rate is often high.n
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nSecondary market liquidity is insufficientn
nEven if the digital tokens can be traded on the secondary market, there may be cases where the lack of active buyers and sellers or buying and selling is too large. Consumers may not be able to easily withdraw from tokens. The worst case is that there is no secondary market, consumers may simply can not exchange their holding token. The exchange or platform that facilitates secondary transactions of digital tokens may not be subject to MAS control.n
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nHighly speculative investmentn
nThe valuation of the digital tokens is usually opaque and speculative. If the digital tokens have no ownership of the seller’s assets, the digital tokens are not supported by any tangible assets. This token is only speculative investment, the transaction price will fluctuate in a short time. Consumers all have the risk of investing in water. The worst case is that digital tokens will become worthless.n
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nCommitment to bring high-return investmentsn
nConsumers should be wary of digital tokens that promise to bring high returns. The higher the return they promise, the higher the risk. High returns may appear in the form of high presentation fees, which promise to pay back the consumer who introduced more investment participants. In fact, these commissions will increase operating costs and reduce the chances of achieving returns.n
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nMoney laundering and terrorismn
nFunds invested in digital tokens are easily used by illegal activities because these transactions are anonymous and this investment can easily raise large amounts of money in the short term. If the law enforcement agencies investigate illegal activities related to tokens and investment projects, consumers will be adversely affected.n
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nCheck whether an individual or entity is under the control of the Singapore Monetary Authority (MAS)n
nMAS’s law requires disclosure of investment product information to consumers. Entities managed by the MAS also follow their code of conduct – aiming to ensure fair trade with entities and consumers. If the consumer does not trade with MAS-regulated entities, they are not protected by MAS law.n
nTo find out whether an entity is regulated by the MAS, consumers can view the MAS’s Financial Institutions Directory on the MAS website. Consumers can also view MAS’s Investor Alert List, which lists some entities that may be mistaken for MAS supervision. Consumers’ notifications on the MoneySENSE website also provide tips to avoid being cheated.n
nWhen consumers suspect that a digital tokens investment project is suspected of fraud should report to the police.n
nIn short, consumers should consider the following when making investment decisions:n
nn1. Make sure you have a comprehensive understanding of the strengths and risks of the product or service.n
n2. Estimate whether the characteristics of the product or service can meet their own needs.n
n3. Before making an investment, consumers should ask questions, check and confirm.n
nAsk questions – as much as possible to ask the seller more questions to a comprehensive understanding of this investment opportunities.n
nb. Check – Check if the seller’s information about himself or the project is true.n
nc. Confirmation – Confirm the qualification of the seller or its representative before investing, using the following resources:n
ni. MAS’s list of financial institutionsn
nii. MAS’s roster of delegatesn
niii. Investor Alert Listn

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