Singapore's tokenization new regulations "raid" Hong Kong, the battle for the Asia-Pacific financial center reignites.

Written by: 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 landscape for digital assets. This document is a comprehensive upgrade to the 2017 “Guidelines on the Issuance of Digital Tokens,” aimed at responding to the real trend of capital market product tokenization activities expanding from issuance to the entire chain including trading, custody, and clearing. With its consistent regulatory philosophy of “technology neutrality and substance over form,” Singapore provides the most detailed regulatory blueprint for the tokenization of global capital markets to date.

2. The evolution from “digital tokens” to “tokenized CMP”

MAS pointed 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 market.” The so-called “tokenization” refers to the creation of digital tokens that represent capital market products using software programs, which are typically deployed on programmable platforms such as distributed ledgers to achieve 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 improve trading efficiency, enhance financial inclusion, and unlock economic value. However, the application of DLT technology also introduces uncertainties 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 “Capital Market Product Tokenization Guidelines” 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 entity activities related to tokenized CMP.

3. Technological neutrality and “same activities, same risks, same regulatory outcomes”

The core principle of the “Guidelines” is “same activity, same risk, same regulatory outcome.” MAS clearly states that tokenized CMP and non-tokenized CMP are essentially the same in economic substance, with the only difference being in their form (such as 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 (including stocks, bonds, commercial trust units), collective investment scheme units, derivative contracts, and spot foreign exchange contracts used for leveraged forex trading, etc. MAS emphasizes in the “Guidelines” that the determination of whether a digital token constitutes a CMP should comprehensively consider its characteristics, intent, structure, and the “bundle of rights” attached to or derived from that token.

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

Case 1: Token A, representing ownership in a company, constitutes stock and must comply with prospectus requirements.

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

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

Case 10: Token K, used solely for the rental of computing resources on the payment platform, 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”, “native/non-native tokens”, to prevent the industry from regulatory arbitrage or misunderstandings arising from these labels.

IV. Compliance Path for the Entire Issuance and Sale Chain

Prospectus and exemption situations. For tokenized CMPs that constitute securities, securities derivative contracts, or CIS units, their public issuance must comply with the provisions of Part 13 of the Securities and Futures Ordinance, including the preparation and registration of a prospectus. However, the “Guidance” also clearly lists the following exemption situations:

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).

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

Tokenization features: including 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 rights of the issuer to modify or overwrite 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 third-party service failures), legal and regulatory risks (such as the uncertain 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 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 usually classified as non-complex products.

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

Licensing requirements. The “Guidelines” specify that entities engaging in activities related to tokenized CMP may need to hold the following licenses:

Tier 1 market platform operators. They may engage in “regulated activities” and are required to hold a capital markets services license.

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

Custody 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 custody services.

Financial advisor. Entities 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 individuals 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 the requirements for tokenized CMP value transfer.

In addition, all personnel must comply with the suspicious transaction reporting obligations under the Proceeds of Crime (Corruption, Drug Trafficking and Other Serious Crimes) Act, as well as the prohibitions under the Terrorism (Financing) Act and United Nations sanctions regulations.

6. Cross-border Applicability and Regulatory Sandbox

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

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

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

A comparison with the regulatory philosophy of the U.S. SEC. The U.S. SEC has long relied on the “Howey Test” to determine whether a token constitutes an “investment contract” and thus falls under securities regulation. SEC Chairman Gary Gensler has repeatedly emphasized that “the vast majority of tokens” should be governed by securities law, 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” provide a more structured analytical framework and a wealth of case studies. Its principles of “technology neutrality” and “substance over form” are spiritually aligned with the U.S. “Howey Test,” but are significantly superior in terms of operability and foreseeability. MAS explicitly states in Case 17 that “the treatment under the Howey Test is not a consideration for determining whether a token is a CMP under the SFA,” highlighting its independent legal applicability 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 guidelines applicable to virtual asset trading platform operators. In 2023, Hong Kong launched 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 introduce a tokenized asset sandbox and issue a digital asset policy statement, establishing a direction for the regularization of government bond tokenized issuance.

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

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

The case guidance is limited, and a comprehensive case database similar to Singapore has not yet been provided, leaving the industry facing uncertainties in specific operations.

The coverage of the entire chain is insufficient, and the regulatory details for the tokenization CMP in secondary market trading, custody, clearing, and other aspects still need to be clarified.

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

VIII. Guidance for the Industry and Future Outlook

Clarify compliance pathways and reduce regulatory uncertainty. The “Guidelines” provide a clear compliance navigation for the industry through the principle of “technological neutrality” and numerous case studies. Issuers and intermediaries can use the “Guidelines” to determine whether their activities constitute regulated activities and what disclosure, licensing, and conduct requirements they need to meet.

Emphasizing “substance over form” to prevent regulatory arbitrage. MAS clearly stated that its focus is on the “economic substance” of tokens rather than their technical form or market labels. This effectively prevents behaviors that evade regulation through technical packaging, ensuring fair competition in the market.

Encourage innovation while emphasizing risk control. Through regulatory sandbox mechanisms and continuous policy updates, MAS has created space for innovation while also highlighting the comprehensive prevention of technology risks, operational risks, legal risks, and custody risks.

9. Singapore guidelines stir the calm waters of Victoria Harbour.

The release of the “Tokenization Guide 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 approach.

In the face of Singapore's proactive approach, is Hong Kong feeling the “chill of spring” before the “warm waters of spring rivers”? 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 covering all categories of tokenized securities, funds, derivatives, etc., along with equally detailed case guidance, it is expected to form a positive interactive twin-city pattern with Singapore in this future financial competitive landscape of tokenization. Otherwise, the waters of Hong Kong may not be limited to mere “ripples.”