The Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) have cautioned consumers against the potential risks of digital token and virtual currency-related investment schemes.

Noting the emergence of Initial Coin Offerings (ICOs) or token sales and other investment schemes involving digital tokens in the country, the advisory posted on the MAS website said that the function of digital tokens has evolved beyond a virtual currency. These tokens may represent ownership or a security interest over the token seller’s assets or property, or a debt owed by the seller.

“Consumers should make it a point to understand the product. Where sellers of digital tokens fail to highlight the risks, consumers should make the effort to find out more information about the underlying project, business or assets,” it said.

Furthermore, it listed a number of potential risks of digital tokens and related investment schemes. These include risks relating to foreign and online operators, sellers without a proven track record, insufficient secondary market liquidity, highly speculative investments, investments promising high returns, and risks of money laundering and terrorist financing.

“The laws administered by MAS require disclosure of information on investment products being offered to consumers. MAS-regulated entities are also subject to conduct rules, which aim to ensure that they deal fairly with consumers. If consumers deal with entities that are not regulated by MAS, they forgo the protection afforded under laws administered by MAS,” it said.

“Consumers who suspect that an investment scheme involving digital tokens could be fraudulent should report such cases to the Police.”

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