New Singapore tokenization regulations "surprise" reignite the battle for the Asia-Pacific financial hub.

Author: Zhang Feng

1. Singapore's Response to the Global Tokenization Wave

On November 14, 2025, the Monetary Authority of Singapore officially released the “GUIDE ON THE TOKENISATION OF CAPITAL MARKETS PRODUCTS”, marking a further deepening and systematization of Singapore's regulatory framework in the digital asset space. This document is a comprehensive upgrade of the 2017 “Guidelines on Digital Token Offerings” and aims to respond to the real trend of the tokenization of capital markets products extending from issuance to the entire chain of trading, custody, clearing, and more. With its consistent regulatory philosophy of “tech neutrality and substance over form”, Singapore has provided the most detailed regulatory blueprint for the global tokenization of capital markets to date.

2. The Evolution from “Digital Tokens” to “Tokenization of CMP”

MAS points out at the beginning of the “Guidelines” that since the release of the “Guidelines on Digital Token Offerings” in 2017, tokenization activities have expanded from mere fundraising to the “full value chain of the capital markets.” The so-called “tokenization” refers to the use of software programs to create digital tokens that represent capital market products, which are typically deployed on programmable platforms such as distributed ledgers, to facilitate the recording and transfer of ownership.

This combination of technologies brings significant opportunities: CMP can be digitally represented, disaggregated, stored, and exchanged, which is expected to enhance trading efficiency, increase financial inclusion, and unlock economic value. However, the application of DLT technology also brings uncertainty regarding the applicability of securities law and may introduce technology-specific risks. MAS believes it is necessary to update the original “Digital Token Issuance Guidelines” to the “Guidelines on Tokenization of Capital Market Products” to clarify the applicability of securities law and other relevant legislation to the following two aspects: the issuance and sale of tokenized CMP; and the related activities involving tokenized CMP.

Three, Technological Neutrality and “Same Activity, Same Risk, Same Regulatory Outcome”

The core principle of the “Guidance” is “same activity, same risk, same regulatory outcome.” MAS clearly points out that tokenized CMP and non-tokenized CMP are fundamentally the same in economic substance, with the only difference being the form of representation (e.g., digital tokens on a DLT network vs. physical certificates or electronic records in a centralized system). Therefore, the regulatory focus is on examining the economic substance of digital tokens rather than their technological form.

What is a “capital market product”? According to Article 2(1) of the Securities and Futures Act, CMP includes securities (such as stocks, bonds, and business trust units), collective investment scheme units, derivative contracts, and spot foreign exchange contracts used for leveraged forex trading, among others. MAS emphasizes in the “Guidelines” that in determining whether a digital token constitutes a CMP, one should comprehensively examine its characteristics, intentions, structure, and the “bundle of rights” attached to or arising from the token.

What is CMP and what is non-CMP? Appendix 1 of the “Guidelines” provides detailed explanations with 17 cases on the circumstances under which digital tokens constitute CMP such as stocks, bonds, CIS units, derivative contracts, etc., and under which circumstances they do not constitute CMP. For example:

Case 1: Token A, representing ownership of the company, constitutes shares and must comply with the requirements of the prospectus.

Case 2: Token B representing the rights to physical loans constitutes a bond, and the issuing platform must hold a capital market service license.

Case 6 & 7: Token G and Token H represent a CIS unit that pertains to rights over a basket of assets (such as equity in FinTech startups, gold), and must meet both the prospectus requirements and the CIS authorization/recognition requirements.

Case 10: Token K, which is only used for the payment platform's computing resource leasing, does not constitute a CMP.

Case 14: The meme token Token O, which has no actual rights and is purely for entertainment purposes, does not constitute CMP.

MAS emphasizes 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 these labels.

4. Compliance Path for the Full Chain of Issuance and Sale

Prospectus and Exemption Cases. For tokenized CMPs that constitute securities, securities derivative contracts, or CIS units, their public offering must comply with the provisions of Part 13 of the Securities and Futures Ordinance, including the preparation and registration of a prospectus. However, the Guidelines also clearly outline the following exemption cases:

Small issuance (not exceeding 5 million SGD within 12 months);

Private placement (no more than 50 people within 12 months);

For institutional investors only;

For qualified investors (must meet specific conditions).

Information disclosure focuses on “the risks of tokenization characteristics.” The “Guidelines” require that the prospectus of tokenized CMP must disclose the information reasonably required by investors and their professional advisors, especially information related to the characteristics of tokenization. MAS has listed the following categories of information that must be disclosed in the “Guidelines”:

Tokenization Features: Includes underlying DLT technology types, smart contract governance, token minting/transferring/redeeming/burning processes, key intermediary roles, etc.

Rights and Responsibilities: Including the rights attached to the tokens (whether they represent legal or beneficial ownership), the method of ownership record (on-chain/off-chain), the issuer's rights to modify or override on-chain records, etc.

Custody arrangements: including the custody methods of tokens (self-custody, issuer custody, third-party custody), private key management processes, custody arrangements for underlying assets (if any), etc.

Risk Disclosure: Including technical and network security risks (such as smart contract vulnerabilities, cyber attacks, forks), operational risks (such as failure of third-party service providers), legal and regulatory risks (such as the uncertain legal status of tokens under property laws), custody risks (such as loss of private keys), liquidity risks, etc.

Distribution Guarantee: The Complex Product Framework Applies Equally. Tokenized CMP and non-tokenized CMP are subject to the same complex product framework and must be classified as “complex” or “non-complex” products. Whether a tokenized CMP is complex depends on the characteristics of the product itself, rather than its tokenized form. For example, tokenized stocks are typically classified as non-complex products.

5. Requirements for Intermediary Activity Licenses and AML/CFT Obligations

License Requirements. The Guidelines specify that entities engaged in activities related to tokenized CMP may be required to hold the following licenses:

Primary market platform operators. May engage in “regulated activities” and are required to hold a capital markets service license.

Operator of the trading platform. If the platform's transactions involve tokens that constitute securities, derivative contracts, or CIS units, it may constitute an “organized market” and must be approved as a recognized exchange or recognized market operator.

Custodian service provider. If there is “control” over customer tokens (including control of private keys or their shards), it may be necessary to hold a capital market service license for providing custodial services.

Financial Advisor. An entity providing financial consulting services for tokenized CMP must hold a financial advisor license or qualify as an exempt financial advisor.

Anti-Money Laundering and Counter-Terrorism Financing. MAS emphasizes that specific personnel 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.

Implement enhanced measures for high-risk situations;

Comply with the requirements for the tokenized CMP value transfer.

In addition, all personnel must comply with the suspicious transaction reporting obligations under the Proceeds of Crime (Confiscation) Act, the Terrorism (Financing) Act, and the prohibitions under United Nations sanctions regulations.

6. Cross-Border Applicability and Regulatory Sandbox

Cross-border applicability. The “Guidelines” clarify that even if the issuance or activity takes place outside of Singapore, as long as it has a “substantive and reasonably foreseeable impact” on Singapore, the Securities and Futures Act may still have extraterritorial applicability.

Regulatory Sandbox. MAS encourages companies that engage in regulated activities to apply for entry into the “Fintech Regulatory Sandbox” using innovative technology. MAS will relax certain legal and regulatory requirements during the sandbox period to provide a testing space for innovation. However, MAS also clearly states that the issuance of tokenized CMPs is generally not within the scope of the sandbox.

7. Regulatory Paths of Singapore, the United States, and Hong Kong

Comparison with the regulatory philosophy of the U.S. SEC. The U.S. SEC has long relied on the “Howey Test” to determine whether tokens constitute an “investment contract” and thus fall under securities. SEC Chairman Gary Gensler has repeatedly emphasized that “the vast majority of tokens” should be governed by securities laws, but his latest remarks have made it clear that investment contracts can terminate, and the legal nature of token assets may change.

The MAS guidelines from Singapore provide a more structured analytical framework and a wealth of case studies. Its principles of “technology neutrality” and “substance over form” resonate in spirit with the U.S. “Howey test,” but are significantly superior in terms of operability and foreseeability. In Case 17, the MAS clearly states that “the outcome under the Howey test is not a factor in determining whether a token is a CMP under the SFA,” highlighting its independent legal application stance.

Comparison with the Hong Kong Regulatory Framework. Since 2018, the Hong Kong Securities and Futures Commission has gradually built a regulatory framework for virtual assets through a series of statements, circulars, and the “Guidelines for Virtual Asset Trading Platform Operators.” In 2023, Hong Kong introduced guidelines related to tokenized securities and tokenized SFC-recognized funds, allowing tokenized issuance under specific conditions. From 2024 to 2025, Hong Kong will continue to launch a tokenized asset sandbox and release a digital asset policy statement to establish the direction for the regularization of government bond tokenized issuance.

However, compared to the Singapore “Guidelines”, the framework in Hong Kong:

The scope is relatively narrow, focusing more on the dichotomy of “security tokens” and “non-security tokens,” rather than comprehensively covering “capital market products.”

Case guidance is limited, and a detailed case library like that of Singapore has not yet been provided, leaving the industry facing uncertainties in specific operations.

Insufficient coverage across the entire chain, the regulatory details for tokenized CMP in secondary market trading, custody, clearing, and other aspects still need to be clarified.

The release of the Singapore “Guidelines” undoubtedly poses competitive pressure on Hong Kong's policy. If Hong Kong wants to consolidate its position as a global fintech hub, it may need to quickly introduce a comprehensive framework that is equivalent, covering a broader CMP that includes tokenized securities, funds, derivatives, and more.

8. Guidance for the Industry and Future Outlook

Clarify compliance pathways and reduce regulatory uncertainty. The “Guidelines” provide a clear compliance roadmap for the industry through the principle of “technological neutrality” and numerous case studies. Issuers and intermediary institutions can use the “Guidelines” to determine whether their business constitutes regulated activities, as well as what disclosure, licensing, and behavioral requirements must be met.

Emphasize that 'substance is more important than form' to prevent regulatory arbitrage. The MAS has made it clear that its focus is on the 'economic substance' of tokens rather than their technical form or market labels. This effectively prevents behaviors that circumvent regulations through technical packaging, ensuring fair competition in the market.

Encouraging innovation while balancing risk prevention. Through the regulatory sandbox mechanism and ongoing policy updates, MAS emphasizes comprehensive prevention of technological risks, operational risks, legal risks, and custody risks while allowing space for innovation.

9. Singapore Guidelines Stirring the Waters of Victoria Harbour

The release of the “Tokenization Guidelines for Capital Market Products” in Singapore is a key step in building a “responsible digital asset ecosystem”. This document sets a new regulatory benchmark for the tokenization of global capital markets with its comprehensiveness, clarity, and forward-looking perspective.

In the face of Singapore's proactive approach, is Hong Kong feeling the chill of spring before the warming waters? As another major international financial center in Asia, Hong Kong has made a good start in the regulation of virtual assets, but it still lags behind in the depth and breadth of tokenizing traditional financial products. If Hong Kong can learn from Singapore's experience and quickly establish a comprehensive framework covering all categories of tokenized securities, funds, derivatives, etc., along with equally detailed case guidance, it is expected to form a positive interaction with Singapore in this future financial competitive arena of tokenization. Otherwise, the waters of the fragrant harbor may not merely be “ruffled”.