Expand your corporate world!

Knowledge base

How to set-up an ICO in Singapore

September 16, 2019

Singapore is a key cryptocurrency industry player, positioning itself as a global hub for cryptocurrency and blockchain-based companies and start-ups. Singapore provides a well-regulated legal framework as well as all the benefits of a stable financial centre with a reliable reputation, excellent banking system and low tax rate. Due to these factors, Singapore is one of the most optimal jurisdictions (probably only Hong Kong and Switzerland can сompete) for Initial Coin Offerings (ICO) fundraising. At the same time, according to the World Bank report, Singapore is also one of the easiest and safest places in the world for doing business.


Cryptocurrency is a digital currency which uses cryptography as the main mechanism of validation and security for transactions. Cryptocurrency is a form of electronic cash; it’s virtual and not controlled by any government or business.  There are many different cryptocurrencies (Litecoin, Namecoin, Peercoin etc.) however the largest and most famous in the investment world is Bitcoin. Bitcoin was created in 2009 by Satoshi Nakamoto, and utilises blockchain technology, and can be named as the brightest example of a decentralised digital currency without a central bank or single administrator that can be transferred from one user to another user on the peer-to-peer bitcoin network without an intermediary. Although Bitcoin was critized so many times for its price volatility, legitimacy and high electricity consumption it is still being used by millions of people for investment and entrepreneurial purposes.


An ICO or an Initial Coin Offering is an innovative type of fundraising using cryptocurrencies and blockchain technology. An ICO – is the initial issue of proprietary digital “tokens” or digital “coins” to entrepreneurs or investors, in exchange for legal tenders or other cryptocurrencies.   “A token” is a new asset class that is both raising capital and enabling the usage of decentralised software applications with the support of blockchain technology. It should be mentioned that the collected funds by “the token issuer” are often used to finance a specific project or have a general funding purpose. The investor in such schemes receive a digital token which is often linked to the right to receive a dividend, a voting right, a license, a property right or a right to participate in the future business activities of the issuer.

Most ICOs are being launched through online platforms, such as crypto-currency forums and other websites. An ICO is a complex process and always takes pre-public engagement phase and post-public engagement phase, which requires  strong marketing,  legal and technical support.




No specific regulatory framework

A well-defined and specific framework

A business in its early stages

Company needs a minimum track record

Fundraising for specific purposes

Fundraising for the businesses long term development

Token holders get limited rights

Shareholders get well-defined rights

Target audience is usually connected with cryptocurrencies

Very often the target audience is represented by institutional investors

Varied levels of transparency

The transparency and reporting processes are prescribed by the listing rules

  • Come up with an innovative idea, think it through and make sure that your project actually needs an ICO for fundraising. At this initial stage, we recommend you hire a professional consultant or risk manager for evaluating your strengths, weaknesses, opportunities and threats.
  • Make analysis of the market and your potential competitors, with whom you are essentially competing with for investor’s fund allocation.
  • Identify the best jurisdiction and legal framework for ICOs.  Incorporate a company in this jurisdiction.
  • Create an ICO token.
  • Prepare a white paper.
  • Launch a functioning website.
  • Launch a solid PR and marketing campaign.
  • Launch an ICO.
  • Start work on your project.
  • Get token out on cryptocurrency exchanges.
  • Don’t forget about legal and tax matters.
ICOs major risks can be classified as follows:

Regulatory and legal risks

  • ICO Tax related risks.
  • Risks related to Regulations.
  • Legal basis of the ICO document package.
  • Connection between the token holders and holding company.
  • Intellectual property.

Business ICO risks

  • Market demand and microeconomics.
  • Traditional players offerings.
  • New market entrants.
  • Technological shifts.
  • Regulatory challenges (licenses for business).

Investment/Contribution/Financial risks

  • No real financial playing and economics behind.
  • No previous traction of metrics (usually only MVP or descriptions).
  • Post ICO project slowdown.

Token risks

  • Lost or stolen tokens.
  • Hacked wallets.
  • Challenge of smart contract

ICO founders risks

  • Usually no capital market experience.
  • Control over funds.
  • Salaries.
  • Team motivation.
  • Financial statements.

Most ICOs are carried out using special online platforms, like crypto-currency forums and equivalent platforms. In such case, an Issuer produces and publishes a technical white paper online with all the details of the project, as well as legal and commercial terms of the proposed ICO. The white paper informs potential investors about the status of the project, key team, external advisors and consultants. To subscribe tokens into the ICO process, the investor needs to transfer virtual cryptocurrencies to the Issuer. This digital currency transfer is made to the designated private wallets addresses of the respective cryptocurrency.

In order to subscribe tokens as a part of the ICO process, an investor needs to transfer a required amount of virtual currency to the Issuer to a designated cryptocurrency address or an electronic wallet of the Issuer. Therefore, the subscription process can be completed online really fast. The tokens help to identify the level of investor’s contribution. In some cases, investors also receive additional tokens for marketing them and trying to attract new investors. After ICO, the investor`s tokens are transferred to the designated accounts. It should also be mentioned that the Issuers can list their tokens on various cryptocurrency exchanges, as well as trade them against cryptocurrencies.


The most typical corporate structure used for an ICO is a foundation, which in Singapore is usually conceptualised in the form of a company limited by guarantee, which is very often designed to carry out certain non-profit, socially useful activities. The ICO process itself is being organised by means of an “Operating Company” – a separate online platform, which is usually a separate legal entity. The Operating Company is usually structured as a Singapore private limited company and segregates the financial, legal and operational risks from the Issuer. It is essentially responsible for providing potential investors a platform for making investments. At this stage, the Issuer and the Operating Company enters into a software development and services agreement with each other. We need to mention that the above-mentioned foundation ICO model originates from Switzerland, where it was originally driven by the tax considerations of this particular jurisdiction. In Singapore, due to the difference in tax systems with Switzerland the foundation model, usage is a bit different. However is generally more reliable from a potential investors prospective and is more stable in the interest of perpetuity. At the same time, a simplified legal structure in Singapore may also be used for the ICO purpose, but the well-known foundation scheme still seems to be more reliable for potential clients.

  • Singapore is the leading financial center for cryptocurrencies and ICOs with stable legal and tax systems, excellent fiscal reputation, strong infrastructure and an ecosystem of officially regulated service providers offering consulting, legal and accounting services.
  • Singapore is an officially “crypto-friendly jurisdiction”; offering a clear framework for fundraising via ICOs. However, if “the digital tokens” were donated or can be identified as cryptocurrency-based forms of crowdfunding, they are currently unregulated. At the same time, if tokens are legal debt instruments (bonds, business trusts, collective investment schemes (CIS)) or offer returns on investments, then they fall under the Singapore securities regulation.  MAS’s approach to ICO regulation of ICO activities and not ICO business itself, reduces compliance and operating costs significantly. For example, MAS AML and CFT regulations are very easy to comply with.
  • Singapore offers an appealing and low tax regime to an ICO -17% corporate tax with no capital gains taxation.
  • It is easy and cost-efficient to incorporate a company in Singapore for the purposes of ICO (ECS provides an all-inclusive company incorporation & maintenance solution).
  • The Singapore government provide subsidies and incentives to Fintech businesses and start-ups.

1.     March 2014:  MAS published an official statement that cryptocurrencies are not regulated unless they fall under the framework of regulated financial instruments.

ECS comments: Even though The Monetary Authority of Singapore (MAS) in March 2014, stated that the cryptocurrencies are not regulated, they noted that they view virtual currencies only as a particular class of digital tokens. At the same time, they clarified that if a digital token represents an ownership or security interest over the assets or property of an issuer; such tokens qualify as an offer of shares or units in a collective investment scheme, according to the Securities and Futures Act (Cap.289). In situations, when such tokens represent a debt owed by The Issuer, they can be considered a debenture, according to the Securities and Futures Act. The regulation of any specific digital token and any ICO offering depends on the terms of the token subscription. MAS officially recommends evaluating all the risks associated with ICOs and other investment schemes connected with digital tokens. MAS published the consumer advice, reminding potential investors on the risks with recommendations to report to Singapore authorities regarding any fraudulent investment experiences linked to digital tokens or cryptocurrencies. In March 2014, MAS also introduced specific regulations for intermediaries of virtual currencies and other digital tokens due to the high potential risks of money laundering and terrorist financing risks in this sphere of business.

2.     August 2016: MAS introduced regulations for virtual currency intermediaries.

In August 2016, MAS introduced a statement regarding regulations on the virtual currency intermediaries (for example, token exchanges), which operate in Singapore. In addition, MAS also published a cryptocurrency policy consultation paper in August 2016 proposing a wide range of changes of the electronic payments regulatory regime in Singapore; including a notice on the potential introduction of a regulatory framework for activity-based payments.

3.     August 2017: MAS clarified its regulatory position with respect to digital token offerings and published a consumer advisory notice in relation to investment schemes with digital tokens and virtual currencies.

In August 2017, a strong increase of interest in ICO offerings framework in Singapore amassed, and MAS made a clarification on its regulatory position with respect to the digital token offerings in Singapore and advisory notice in relation to the investment schemes involving digital token offerings and digital currencies, which was published in cooperation with the Singapore Commercial Affairs Department. It highlighted the risks associated with digital tokens which do not only function as cryptocurrencies. MAS later informed that in a situation when a digital token performs certain functionalities that fall within the financial market regulation framework, the MAS AML and Prevention laws may apply.

4.     November 2017: MAS published an instruction on the Singapore securities regulation application to offers or issues of digital tokens and cryptocurrency in Singapore.

On the 14th of November 2017, MAS presented an additional explanation on the way the Singapore Securities Regulation controls digital tokens and cryptocurrency markets in Singapore. According to Singapore Law, the offer/issuance of digital tokens in Singapore is regulated in situations when digital tokens in Singapore fall under the category of capital markets financial instruments under the SFA (securities; futures contracts; contracts or arrangements for the purposes of foreign exchange trading or leveraged foreign exchange trading). Due to these regulations, the participants of the cryptocurrency/digital token markets, including operators of platforms on which digital tokens are being offered. Operators of token exchanges and similar platforms where digital tokens can be traded; specialists providing professional advice or fund management services in respect of digital tokens or virtual currencies may require obtaining a regulatory license in order to carry on such activities legally. As a result, the securities tokens remain as legal tender, however need to be licensed. MAS’s attitude shows that the ICO in Singapore is an officially accepted way of getting additional investments and are not likely to be banned by the authorities as has previously happened in China, South Korea and Vietnam.


It is important during the process of marketing or promoting any ICO or digital token to investors externally to Singapore to stay compliant not only with the laws of Singapore but also with the jurisdiction law of the potential investor residency. In the past, the issuers of digital tokens simply excluded investors from jurisdictions with potential risks by means of omitting to mention them in their ICO Terms and Conditions, as well as other documents.


According to the Singapore regulations the digital tokens can be classified as “securities” or as “utilities”. The real nature of the digital token identifies the rights attached to it and the terms of its regulation.

In the most cases the digital tokens, issued in Singapore can be classified as follows:

  • Security tokens – digital tokens with security features as shares, debentures, bonds with opportunities for income generation, as well as potential legal liabilities for the issuer.
  • Digital currency – a class of token which can be used for transactions, exchange, assets or value storage, as well as accounting limits.
  • Asset-backed tokens – digital tokens, which are backed with assets, such as gold, securities, real estate, cash or diamonds.
  • Utility tokens – are digital tokens for supporting services or functionalities on blockchain-based platforms.


The general regulatory position in Singapore is that digital tokens are not generally regulated, although if they can be identified as securities or other regulated financial instruments under the SFA, they are regulated according to it. In such instance, if a digital token is regulated, the Issuer needs to stay compliant with the applicable laws relating to the securities regulations and financial markets.


1. White Paper

A white paper for an ICO is a document that describes the exact technology behind a certain blockchain project. This usually includes detailed information about the token, its system architecture, technical requirements, and issuer. White Papers in most cases provide information about market capitalisation and its further prospects of growth or decrease; financial models of the business, as well as the terms and conditions of the tokens. In order to be irrefutable, White papers should include information about the founders of the project (its core team), as well the full story of the project. There are no exact technical requirements for the white paper and due to this fact, may vary considerably. The white paper can be prepared both by the Issuer and by the project promoter and it should highlight the advantages of the project and attract potential investors. The white paper is usually being published on the project website in order to promote the project. White Papers make a strong influence on the legal opinion and legal documents similar to the ICO terms and conditions, as well as other documents and agreements. All refer to the White Paper.

2. Token Legal Opinion

To establish an ICO, an Issuer needs to determine the digital token legal structure. The legal opinion of a token should be issued by a licensed and regulated Singapore law firm, which will identify whether a token is regulated token (security) or unregulated utility token.

A Singapore licensed law firm will:

  • Study the proposal according to the White Paper functionality of the digital token, as well as the overall company background information including marketing materials and facts identifying what type of rights are attached to the digital tokens. The law firm identifies if the digital token is a utility token, security, debenture, financial product under investment scheme in the legal framework of Singapore.
  • Identify where the digital token issuer operates (according to open source data) and where the likely investors and participants are based. Singapore legislation may be applicable to an ICO made by an Issuer outside of Singapore if the ICO digital tokens fall under Singapore financial services regulation and targets investors based in Singapore.
  • Identify what are the ways of transferring or exchanging digital tokens into fiat currency?
  • Identify how investors sell the digital tokens, if this option is possible.
  • Qualify the digital tokens and identify whether they offer a stored value facility, if they are backed by certain assets or may be considered a legal or beneficial interest in any assets.
  • Inform potential investors how the digital tokens are going to be marketed and represented, as well as how any bonus or bounty program may be handled.
  • Answer questions regarding functionalities or options for the token use, opportunities of additional token sales in the future. Only a licensed law firm can give a legal opinion on the future scheme of project implementation.

We need to mention that although in most cases the legal opinion produced by the licensed law firm is an internal document; very often the token exchanges consider them as compulsory documents and request the Issuer to provide them accordingly.

3. ICO Terms and Conditions

Cryptocurrencies and other digital tokens are virtual realm elements and are essentially only a set of rights.  The ICO Terms and Conditions are closely connected with the ICO White Paper and can be treated as an integrated part of any ICO process, as long as they contain the major legal agreement between an investor and the Issuer of the digital token. The Terms and Conditions may also define the token and describe its features in a detailed way, by providing information about the Issuer. This can include:

  • Details about pricing and the arranged schedule of the token sale
  • Set out restrictions on the distribution of tokens
  • Contain disclaimers and indemnification provisions protecting the Issuer.
  • Set out the procedures for token acquiring and receiving.
  • Contain representations and warranties by investors,
  • Establish commercial terms depending on the technological details of the token offering.

We need to mention that the only legal regulation which can protect an investor from an unregulated digital token/coin is in most cases a legal provision found in the commercial agreements entered into between the Issuer and the Investor. From the position of the Issuer, official ICO documentation can protect the Issuer and its Directors from the legal claims of investors.

4. Pre-sale Agreement or Pre-ICO agreement

Often, Issuers decide to run a limited token sale event, which is being called a Pre-Sale or Pre-ICO. This is usually being carried out before an official crowd sale or ICO campaign launch.  The Pre-ICO sales targets are in most cases are much lower than the main ICO fundraising targets. The Issuers at Pre-Sale usually sell tokens to their friends, family members, colleagues and selected groups of people with a large discount. Pre-sales often use separate smart contracts from the main ICO contracts in order to avoid a mixture of Pre-ICO and the main ICO.

Learn how to solve problems in your business today

Join the club

Every week, we'll be sending you curated materials handpicked tips about international business, law, taxes, accounting and compliance.

Plus, you'll be the first to know about our discounts!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.