Author: Zhang Feng
I. Singapore's Response to the Global Tokenization Wave
On November 14, 2025, the Monetary Authority of Singapore officially released the "Guide on the Tokenization of Capital Markets Products (CMPs)" (), marking a further deepening and systematization of Singapore's regulation of digital assets. This document is a comprehensive upgrade of the 2017 Digital Token Issuance Guidelines, aiming to respond to the growing trend of tokenization activities in the capital market expanding from the issuance stage to the entire chain, including trading, custody, and clearing. Singapore, with its consistent regulatory philosophy of "technology neutrality and substance over form," has provided the most detailed regulatory blueprint to date for tokenization in the global capital market. II. The Evolution from “Digital Tokens” to “Tokenization” The MAS, in the opening of its Guidelines, points out that since the release of the Digital Token Issuance Guidelines in 2017, tokenization activities have expanded from simple financing activities to the “entire value chain of the capital market.” “Tokenization” refers to the use of software programs to create digital tokens representing capital market products, typically 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, disassembled, stored, and exchanged, potentially improving transaction efficiency, enhancing financial inclusion, and unlocking economic value. However, the application of DLT technology also introduces uncertainty regarding the application of securities law and may introduce technology-specific risks. MAS believes it is necessary to update the original "Guideline on Digital Token Issuance" to the "Guideline 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 CMPs; and physical activities related to tokenized CMPs. III. Technological Neutrality and "Same Activities, Same Risks, Same Regulatory Outcomes" The core principle of the "Guideline" is "Same Activities, Same Risks, Same Regulatory Outcomes". MAS explicitly states that tokenized CMPs and non-tokenized CMPs are not different in economic substance, the only difference being their form of presentation (e.g., digital tokens on DLT networks vs. physical certificates or electronic records in centralized systems). Therefore, the regulatory focus is on examining the economic substance of digital tokens, rather than their technical form. What are “capital market products”? According to Section 2(1) of the Securities and Futures Act, CMPs include securities (including stocks, bonds, and business trust units), collective investment scheme units, derivative contracts, and spot foreign exchange contracts used for leveraged foreign exchange transactions. In its guidance, MAS emphasizes that determining whether a digital token constitutes a CMP requires a comprehensive examination of its characteristics, intent, structure, and the “bundle of rights” attached to or derived from the token. What is a CMP, and what is a non-CMP? Appendix 1 of the Guidelines details 17 case studies illustrating under what circumstances digital tokens constitute CMPs such as stocks, bonds, CIS units, and derivative contracts, and under what circumstances they do not. For example: Case 1: Token A, representing ownership of a company, constitutes a stock and must comply with the prospectus requirements. Case 2: Token B, representing the right to lend to an entity, constitutes a bond, and the issuing platform must hold a capital market services license. Case 6 & 7: Tokens G and H, representing rights to a basket of assets (such as equity in FinTech startups and gold), constitute CIS units and must simultaneously meet the requirements of the prospectus and CIS authorization/approval. Case 10: Token K, used solely for renting computing resources on payment platforms, does not constitute a CMP. Case 14: Token O, a "meme token" with no actual rights and purely for entertainment purposes, does not constitute a CMP. MAS specifically emphasizes that it deliberately avoids using labels such as "utility token," "security token," and "native/non-native token" to prevent regulatory arbitrage or misunderstanding caused by these labels. IV. Compliance Path for the Entire Issuance and Offering Chain [Prospectus and Exemption Circumstances] For tokenized CMPs that constitute securities, securities derivative contracts, or CIS units, their public offerings must comply with Part 13 of the Securities and Futures Act, including the preparation and registration of a prospectus. However, the Guidelines also explicitly list the following exemptions: Small-scale offerings (not exceeding S$5 million within 12 months); Private placements (not exceeding 50 investors within 12 months); Offerings only to institutional investors; Offerings to qualified investors (subject to specific conditions). Information disclosure focuses on "risks associated with tokenization characteristics." 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 tokenization characteristics. The MAS lists the following categories of information to be disclosed in the guidelines: Tokenization Characteristics: This includes the type of underlying DLT technology, smart contract governance, token minting/transfer/redemption/burning processes, key intermediary roles, etc. Rights and Responsibilities: This includes the rights attached to the token (whether they represent legal or beneficial ownership), the method of ownership recording (on-chain/off-chain), and the issuer's right to modify or overwrite on-chain records, etc. Custody Arrangements: This includes the custody method for tokens (self-custody, issuer custody, third-party custody), private key management process, and custody arrangements for underlying assets (if any). Risk Disclosure: This includes technical and cybersecurity risks (such as smart contract vulnerabilities, cyberattacks, forks), operational risks (such as third-party service provider failures), legal and regulatory risks (such as uncertainty regarding the legal status of tokens under property law), custody risks (such as lost private keys), and liquidity risks. Distribution Guarantee: Applicable equally to complex product frameworks. Tokenized CMPs, like non-tokenized CMPs, are subject to the same complexity product framework and must be classified as either "complex" or "uncomplex." The complexity of a tokenized CMP depends on the characteristics of the product itself, not its tokenization form. For example, tokenized stocks are typically classified as uncomplex products. V. Intermediary Activity Licensing Requirements and AML/CFT Obligations The guidelines clarify that entities engaged in activities related to tokenized CMPs may need to hold the following licenses: Primary market platform operator. May engage in "regulated activities" and need to hold a capital market services license. Trading platform operator. If the platform trades tokens that constitute securities, derivative contracts, or CIS units, it may constitute an "organized market" and requires approval as an authorized exchange or authorized market operator. Custody service provider. If you have "control" over client tokens (including control of the private key or its shards), you may be required to hold a Capital Markets Services License to provide custody services. Financial advisor. Entities providing financial advice on tokenized CMPs must hold a financial advisor license or be exempt from financial advisor requirements. Anti-money laundering and counter-terrorist financing. MAS emphasizes that specific individuals engaged in tokenized CMP-related activities must comply with the AML/CFT requirements outlined in the relevant MAS notices, including: identifying, assessing, and understanding their ML/TF risks; developing and implementing policies, procedures, and controls related to customer due diligence, transaction monitoring, screening, suspicious transaction reporting, and record keeping; taking enhanced measures for high-risk situations; and complying with the requirements for tokenized CMP value transfer. Furthermore, all personnel must comply with the obligation to report suspicious transactions under the Corruption, Drug Trafficking and Other Serious Offences (Forfeiture Proceeds) Act, as well as the prohibitions under the Terrorism (Stop Financing) Act and UN sanctions regulations. VI. Cross-border Application and Regulatory Sandbox The Guidelines clarify that even if an issuance or activity is partially conducted outside Singapore, the Securities and Futures Act may still have extraterritorial application as long as it has a "material and reasonably foreseeable effect" on Singapore. Regulatory Sandbox. MAS encourages companies that use technology in innovative ways to conduct regulated activities to apply for entry into the "Fintech Regulatory Sandbox." During the sandbox period, MAS will relax certain legal and regulatory requirements, providing testing grounds for innovation. However, MAS also clearly states that the issuance of tokenized CMPs is generally not within the scope of the sandbox. VII. Regulatory Paths in Singapore, the United States, and Hong Kong A Comparison of Regulatory Philosophies with the US SEC. The US SEC's regulation of digital assets has long relied on the "Howey Test" to determine whether tokens constitute "investment contracts" 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 remarks have clarified that investment contracts can be terminated, and the legal nature of token assets may change. The Singapore MAS's guidelines offer a more structured analytical framework and abundant case studies. Its principles of "technology neutrality" and "substance over form" are similar in spirit to the US "Howey Test," but significantly superior in operability and predictability. In Case 17, MAS explicitly states that "the outcome of the Howey Test is not a factor in determining whether a token is a CMP under SFA," highlighting its independent legal application stance. Comparison with the Hong Kong regulatory framework. Since 2018, the Hong Kong Securities and Futures Commission (SFC) has gradually built a regulatory framework for virtual assets through a series of statements, circulars, and the "Guidance Applicable to Virtual Asset Trading Platform Operators." In 2023, Hong Kong introduced guidelines on tokenized securities and tokenized SFC-approved funds, allowing tokenized issuance under specific conditions. From 2024 to 2025, Hong Kong further launched a tokenized asset sandbox and issued a digital asset policy statement, establishing the direction of normalizing the tokenized issuance of government bonds. However, compared to Singapore's guidelines, Hong Kong's framework is relatively narrow in scope, focusing more on the dichotomy of "security tokens" and "non-security tokens," rather than comprehensively covering "capital market products." Limited case guidance; a comprehensive case library like Singapore's is not yet available, leaving the industry facing uncertainty in practical operations. Insufficient full-chain coverage; regulatory details regarding tokenized CMPs in secondary market trading, custody, and clearing remain to be clarified. The release of Singapore's guidelines undoubtedly poses policy competition pressure on Hong Kong. If Hong Kong wants to solidify its position as a global fintech hub, it may need to quickly introduce a comprehensive CMP framework that is equivalent to its own and covers a wider range of CMPs, including tokenized securities, funds, and derivatives. VIII. Industry Guidance and Future Outlook The Guidelines provide clear compliance guidance for the industry through the principle of "technology neutrality" and numerous case studies. Issuers and intermediaries can use the Guidelines to determine whether their business constitutes a regulated activity and what disclosure, licensing, and behavioral requirements they need to meet. Emphasizing "substance over form," preventing regulatory arbitrage. MAS explicitly states that it focuses on the "economic substance" of tokens rather than their technical form or market label. This effectively prevents regulatory circumvention through technological packaging and ensures fair market competition. Encouraging innovation while prioritizing risk control. Through regulatory sandbox mechanisms and continuous policy updates, MAS, while allowing room for innovation, also emphasizes comprehensive control over technological, operational, legal, and custody risks.
IX. Singapore's Guidance Ripples the Waters of Hong Kong
The release of Singapore's "Guide to Tokenization of Capital Market Products" is a key step in its efforts to build a "responsible digital asset ecosystem." With its comprehensiveness, clarity, and forward-looking approach, this document sets a new regulatory benchmark for tokenization in global capital markets.
Faced with Singapore's proactive approach, has Hong Kong felt the "chill of spring" before the "warming of the river"? 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 introduce a comprehensive framework for all categories of CMPs (Certified Management Platforms) covering tokenized securities, funds, and derivatives, along with equally detailed case studies, it could potentially establish a mutually beneficial partnership with Singapore in the highly competitive field of tokenization in the future of finance. Otherwise, the situation in Hong Kong may not remain merely a superficial ripple.
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