Meng Yan: Non-securities pass overseas financing? Singapore MAS or point out a clear road

In the past year, many blockchain companies have tried to embrace compliance regulation through STO. However, at present, the biggest obstacle to this path is the double threshold of exchange licenses and qualified investors, which makes the distribution of ST sales. Insufficient sex makes it more like a variant of private placement at this stage, which is far from people's expectations.

Recently, Meng Yan, vice president of CSDN and the promoter of the general economics, proposed a new compliance financing path after interpreting Singapore's regulatory policies and field visits. He said that the "A GUIDE TO DIGITAL TOKEN OFFERINGS" issued by Singapore MAS on November 30 last year has fundamentally changed the model of "Token" related matters in Singapore. The case in the guide is especially worthwhile. Study, which explicitly mentions several non-securities-based certificates, is not regulated by MAS, and can be financed globally through pre-sales.

How to interpret this guide? What inspired us in the design of the certificate? On April 20th, Meng Yan gave a detailed introduction at the Financial Technology Forum hosted by CSDN.

The following is a compilation of the speech content, organized by Babbitt.

Everyone knows that a large number of blockchain companies have registered foundations in Singapore and then went to finance. But before that, Singapore is only a service and tool to provide this process. Your project cannot be used for the Singapore market, nor can it finance Singapore citizens. This model of pre-sale token financing is not clear to the Singapore regulatory authorities. Positioning, the nature of the law is not clear.

But after the release of the Digital Pass issued guidelines on November 30 last year, the situation changed radically. Singaporean companies can invest in Singaporean citizens in the form of pre-sale tokens, and can even extend to Southeast Asia, excluding China and the United States.

Why is this change happening? What exactly has the Singapore Digital Pass Issuance Guide solved? Next, share my experience.

First, the guide tells what kind of Digital Token will be regarded as a capital market product, will it be regulated by MAS? Share of equity, bonds and pooled investment plans. The first two do not need to be explained. The collective investment plan share refers to making an investment agreement in a certain way, and then using a token instead of an investment agreement. In fact, many financing methods that have appeared in the past belong to this category.

Second, Singapore did not release the supervision of the Security Token, and also pointed out whether it is a Security Token, determined by the MAS.

Third, there is still no confirmation of the legal status of the exchanges and the platform for sale, and they are legally vague.

Fourth, no matter what you do, you must meet the requirements of anti-corruption, anti-terrorism, anti-money laundering, and compliance with the UN sanctions agreement.

Coincidentally, on November 19th, the week before the release of the Digital Pass Issuance Guide, MAS released the Payment Services Bill (PSB), which explicitly requires payment service compliance for digital currency, payment class token And related transactions may require licensing and supervision. Bill refers to the proposal. It is a vote from the final implementation of the bill. It is officially executed after approval by the Singapore Parliament, which means that you have to comply with the relevant regulations.

These two documents, together with a series of previous bills, have made Singapore a preliminary system for how to regulate digital currency, and are at the forefront of the world.

Singapore's non-securities-based certification

What we have listed above is the regulation of Security Token mentioned in the guide, but the real focus is not here. The 11 cases listed later in the guide refer to the non-securities pass, which we generally call Utility Token. This is the focus I have observed.

These cases are all patiently studied. They must not be fabricated by MAS. It is likely that there are practical projects to come to the consultation. After the experts negotiated, they wrote a case. Now let's take a look at it, what treasures are worth exploring.

1. About non-Security Token financing


In the first case, a company plans to create a platform for user computing to share leases. In order to develop the platform, the company plans to issue Token for financing, and the Token will give the token holders the computing power provided by other users of the platform.

It is clearly stated in the guide that such Tokens are not securities and are therefore not subject to any requirements of the SFA or FAA. More importantly, the guide writes that this Token can be used to finance it.

Why can't securities be used for financing? Very simple, it represents the platform's resources, products and services, you can use for pre-sale, use pre-sales for development and market expansion. We used to cover it and pre-sale it, but in the MAS guide, it stated that it was “raise funds” financing and legal.

2. About stable currency


In the eleventh case, a company saves a portion of the legal currency and then issues a token, that is, the use of centralized debt to issue stable currency. This model is seen in MAS as a guarantee of the legal currency reserve and promises to be rigidly redeemed. The token is actually a bond, and the MAS needs to supervise the bond and ask for a license.

Interestingly, it has two requirements. Even if a license is obtained, the Token may also be considered as an electronic currency by the PSB and requires a license.

3. About the exchange


In the sixth case, although the exchange is still in a gray area, in this case, if the exchange only trades payment and functional tokens, such as Bitcoin and Ethereum, if all Tokens are not securities, then the transaction It is compliant and is currently not regulated by MAS, and there is a possibility of being regulated in the future.

However, the exchange must meet PSB's requirements for anti-money laundering and counter-terrorism finance, including KYC, suspicious transaction reporting system, auditable accounts, and record keeping. These requirements have increased a lot for us to engage in blockchain-related financial services. Restrictions. Once the exchange is online with a Security Token, it needs to be supervised immediately and must apply for a corresponding license.

US non-securities-based certification

Let's take a look at the United States. The SEC issued its first no-objection letter to Turnkey Jet Token on April 3. The reason why TKJ can pass the audit is for several reasons:

First, it will not use Token pre-sale financing to develop products, but will be released after product development is completed; second, TKJ Token will be available as soon as it is issued; third, Token will only be transferred within TKJ wallet, not connected to third parties. Wallet; fourth, the price is constant 1 dollar, can be repurchased, but the repurchase price is not higher than 1 US dollar; Fifth, the marketing aspect only emphasizes the functionality of Token, not mentioning investment attributes.

This regulation is like the 2007, our country's regulatory rules for Q coins. However, after 2008, we will not allow repurchase, that is, the legal currency can be purchased for Token, and Token cannot be replaced with French currency.

We can see that Singapore’s regulatory requirements are much looser than those in the United States. First, Singapore did not propose to re-issue the Token for the product; secondly, Singapore did not require the Token to be available immediately; in addition, there was no restriction on the flow of the wallet; finally, it did not stipulate that the price could not fluctuate.

How to design Token to deal with compliance regulation?

In this case, it gives us a lot of maneuverable space. So, what kind of Token may not be classified as a securities type, without being subject to MAS regulation? After studying the "Digital Pass Issue Guide", I think there are three types: technical, user power, product and service acceptance. I want to focus on the technical type because it is relatively complicated.

1. Technical certificate


What if we want to turn the current information Internet into a value Internet? The current Internet is a four-layer protocol: physical link layer, network layer, transport layer, application layer. Can we insert a protocol called the pass layer between the transport layer and the application layer?

For the computer, there has been such a change: for example, if you want to read an article, use a computer to connect to the server, you want to get the document resource address, the server confirms that you can provide resources, give a quote for a Token, you agree on the computer. Quote, initiate a transfer, the server confirms that the payment was successful, and passes the required documents back to your computer, and the server closes the connection.

Imagine if you put the above process into a machine, this Token is an indispensable part of the machine's operation. In this case, it is a technical Token. So what are the specific cases?


The game machine is very simple. You can put it in before you can use it. You may not know what the meter is. When I was a child, the power plant in the old industrial area in the northeast will give its employees a power meter. One piece of electricity is once electricity, and it is in the meter. Once plugged in, it can be used. Others have to go to the store to buy, and employees send 200 chips per month. ETH is a typical technical certificate. In fact, Ethereum is like a global computer. You need Buy ETH to get gas, then let this computer serve you.

You may say that such a Token has no room for appreciation, and the value of the Token paid for the microphone cannot always be changed.

So further, I designed a set of dual currency models. A steady value Token is to use future products and services to accept and anchor certain legal currency; a variable value Token, if your issue quantity is certain, then anchor a certain share of system resources, when the system's total resources expand Or shrink, then the value corresponding to the unit token is changing. When you combine the two, a lot of things can be done.

2. User rights certificate

One case in the guide is that a company has made a DAPP and puts this DAPP on the e-commerce platform. You can evaluate the e-commerce platform through DAPP's Token. This Token belongs to the user power type, but if you want to take the initiative Comments, such as complaints, require a Token. However, if it is a vote initiated by the platform, you passively participate, it is the e-commerce platform to pay you Token. The Token can still be offered for financing, subject to CDSA, TSOFA and other regulations.

3. Product and service acceptance certificate

In another case, a consulting firm has made a platform that allows corporate users to issue Tokens on their platforms, and user-issued Tokens can only be used to repurchase their products in the future. The nature of this Token is a product and service acceptance type, and the distribution platform itself has no problem.

I am thinking, can you change it a bit, for example, the equivalent of this case is a platform for companies to issue points, then can we dye these points, such as Yoshinoya's blue, McDonald's is red, KFC's It is white, and so on, putting the solution of the dyed coin into it.

In summary, Singapore MAS's token financing guide gives a clear path. Everyone must seriously study 11 of them, which is very rewarding.

Finally, let's sort through the process. First, you should conceive the project, design a non-securities certificate model, and then issue a legal opinion. If you want to follow the laws of the United States and Singapore, you should first do angel financing. Money is released after product development and then issued to Token for sales and trading. If you only follow the laws of Singapore, you can pre-sell Token for product development. Because according to the Singapore MAS “Digital Pass Issue Guide”, companies registered in Singapore finance legal compliance through pre-sales through non-securities Tokens.

To read the original "A GUIDE TO DIGITAL TOKEN OFFERINGS" (Digital Pass Edition), please click on the link: