Singapore property tokens: when securities law applies, and what follows

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Kooky

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A token that stands for a slice of a building raises two separate legal questions in Singapore. The first is about the token as an investment: is it one of the products that the Securities and Futures Act 2001 regulates, and if so, which rules about offering it to the public apply? The second is about the land underneath: if the building is a home, who is allowed to hold an interest in it at all? The two questions are answered by two different statutes, and neither statute steps aside because the interest is recorded on a distributed ledger.

This guide sets out what the published law says on both. It follows the definitions in the Securities and Futures Act, the prospectus rule and the exemptions from it with their limits, what the Monetary Authority of Singapore (MAS) has said about tokens, and the Residential Property Act 1976. It describes general rules. How they apply to one structure depends on how that structure is built, and the last section lists the points the sources read for this guide do not settle.

Securities and Futures Act 2001, sections 272A, 272B and 275, as published on Singapore Statutes Online. The Act lets MAS prescribe other figures.

MAS looks at what the token does, not what it is called

The clearest public statement of the approach is a written reply to a parliamentary question, published by MAS and dated 15 February 2022. It was given by Tharman Shanmugaratnam, then Senior Minister and Minister in charge of MAS, in answer to a question about non-fungible tokens. The reply says MAS takes a technology-neutral stance and looks through to the underlying characteristics of a token to decide whether it is regulated.

Two consequences follow from that reply. If a token has the characteristics of a capital markets product under the Securities and Futures Act, it is subject to MAS's regulatory requirements. And the label on the token decides nothing: the reply gives the example of a token structured to represent rights to a portfolio of listed shares, and says that such a token would, like other collective investment schemes, be subject to prospectus, licensing and business conduct requirements.

The same reply marks the other side of the line. As at February 2022, it says, MAS did not regulate tokens whose underlying assets are digital art and collectibles. The reply does not mention property or real estate; what it gives a reader is the method.

For further detail the reply points to an MAS document, "A Guide to Digital Token Offerings", which it describes as updated on 26 May 2020. That guide could not be read for this article, and its content is not described here.

The vocabulary: capital markets products, securities, debentures

The Securities and Futures Act builds its rules on a few defined terms, all found in section 2(1) as published on Singapore Statutes Online.

"Capital markets products" is the widest. The definition lists securities, units in a collective investment scheme, derivatives contracts, spot foreign exchange contracts for the purposes of leveraged foreign exchange trading, and other products that MAS may prescribe. Securities and units in a collective investment scheme appear there as two separate items, which matters later because the Act deals with offers of each in a different division of Part 13.

"Securities" covers shares, units in a business trust, and any instrument conferring or representing a legal or beneficial ownership interest in a corporation, a partnership or a limited liability partnership. It also covers debentures. The wording about instruments reaches something that represents a beneficial interest in a company even when it is not called a share.

"Debenture" includes any debenture stock, bond, note and any other debt securities issued, or proposed to be issued, by a corporation or any other entity. The definition also refers to debt securities issued by the trustee-manager of a business trust and by the trustee of a real estate investment trust.

For a property token, those definitions sketch the common shapes. A token that gives its holder an ownership interest in the company that owns a building points towards the definition of securities. A token that records a loan to the entity that owns it, repaid with interest from rents or a sale, points towards a debenture. A token that gives a share of the income from a property that someone else runs points towards the third term, the collective investment scheme, which needs a section of its own.

When a property token is a unit in a collective investment scheme

The definition of "collective investment scheme" in section 2(1) starts from an arrangement in respect of property. It is not limited to shares or bonds, and it is the definition that most naturally meets a pooled interest in real estate. As the Act words it, three features are in view.

A "unit" is defined just as widely: a right or interest, however described, in a collective investment scheme, whether or not the scheme is constituted as an entity, including an option to acquire such a right or interest. The words "however described" answer the question of labels. A right in a scheme is a unit whether the document calling it into being names it a unit, a share, a note or a token.

The definition also lists what is not a scheme. Among the exclusions are an arrangement operated by a person otherwise than by way of business, and an arrangement under which each of the participants carries on a business other than investment business. The Act further excludes family and employee arrangements, franchises, arrangements of co-operative societies, life policies and deposit-only arrangements, and lets MAS specify others in the Gazette.

One related term appears in the same section. A "closed-end fund" is an arrangement under which the units issued are exclusively or primarily non-redeemable at the election of their holders, subject to listed exclusions that include certain real estate trusts. The rules that authorise a scheme for offer to the public, including the regime for real estate investment trusts, sit in a part of the Act that could not be read for this guide. They are an open point, noted at the end.

The prospectus rule and what a breach costs

Once a token is securities, section 240(1) of the Act applies to any offer of it. A person must not make an offer of securities or securities-based derivatives contracts unless the offer is made in or accompanied by a prospectus. The prospectus must be prepared under section 243, signed and lodged with MAS, and registered by MAS, and the offer must comply with the prescribed requirements.

The Act defines "prospectus" in section 239 by what a document does. It means any prospectus, notice, circular, material, advertisement, publication or other document used to make an offer. Profile statements, material authorised under section 251 and product highlights sheets are carved out of the term. Under section 240(4), an offer may be accompanied by a profile statement, a shorter extract of the prospectus, in place of the full document where the conditions are met and both documents are registered.

Advertising is restricted as well. Under section 251(1), where a prospectus is required, a person must not advertise the offer, or publish a statement that refers to it or is likely to induce people to subscribe, unless section 251 authorises it.

A breach of section 240(1) is a criminal offence under section 240(7). The penalty is a fine not exceeding S$150,000, imprisonment for up to 2 years, or both. For a continuing offence there is a further fine of up to S$15,000 for every day or part of a day the offence continues after conviction.

The exemptions that follow are found in sections 272A to 282, in the division of Part 13 that deals with securities. Offers of units in a collective investment scheme are dealt with in a separate division, which was not read for this guide. The figures below are therefore stated for securities only.

Small offers: S$5 million in any 12 months

Section 272A exempts what the Act calls small offers. Under section 272A(1), the total amount the person raises from such offers within any period of 12 months must not exceed S$5 million, or its equivalent in a foreign currency, or another amount that MAS prescribes. The ceiling is on the total across offers, and the 12 months are any 12 months, so the window rolls.

The amount is only the first condition. The others, as the section sets them out, are these.

1. The offer is personal. Under section 272A(3), it may be accepted only by the person to whom it is made, and that person must be likely to be interested in it.
2. Each offer comes with a prescribed written statement that it relies on the exemption and is not accompanied by a registered prospectus, and with a written notice that the securities cannot be resold unless the resale fits a listed exception (section 272A(1)(b)). One of those exceptions is a resale at least 6 months after the securities were acquired.
3. None of the offers is accompanied by an advertisement (section 272A(1)(c)).
4. No selling or promotional expenses are paid, other than administrative or professional costs, or commissions or fees paid to specified licensed or exempt persons (section 272A(1)(d)).
5. No prospectus has been registered for the offer, or the registered prospectus has expired under section 250, or MAS has received prior written notice of the intention to rely on the exemption (section 272A(1)(e)).

A worked example shows how the rolling window bites. Assume an issuer raises S$3.2 million through personal offers in March, and plans a second round of S$2.1 million in November of the same year. The two rounds fall within 12 months of each other and add up to S$5.3 million, which is S$0.3 million over the ceiling. To stay within section 272A on amount alone, the November round could be no larger than S$1.8 million. The figures are illustrative.

Whether a given communication about a token is an advertisement in the Act's sense depends on the facts of the case.

Private placements: no more than 50 persons

Section 272B is built on a head count where section 272A is built on an amount. Under section 272B(1), offers must be made to no more than 50 persons within any period of 12 months. Section 272B(2) lets MAS prescribe a different number.

The count is of the persons to whom offers are made, as the section is worded, within the 12 months. The same restrictions travel with it as with small offers: no advertisement, limits on selling or promotional expenses, and the same condition about a registered prospectus.

A second worked example, with assumed figures: an issuer makes offers to 38 persons in January and to 15 more in September. That is 53 persons within 12 months, 3 over the limit in section 272B(1), whatever the number who actually bought. The limit in section 272B(1), as read for this guide, is a number of persons, not an amount.

Institutional and accredited investors

Two further exemptions turn on who the buyer is.

Section 274 covers offers made to an institutional investor, and states no amount, number or period. The term is defined in section 4A(1). It includes the Government, prescribed statutory boards, foreign central governments and central banks, banks licensed under the Banking Act 1970, licensed finance and insurance companies, holders of capital markets services licences, approved exchanges and clearing houses, pension funds and collective investment schemes.

Section 275 covers offers to a "relevant person", a term that under section 275(2) includes accredited investors and certain related persons. The offer must still be made without an advertisement, with limited selling expenses and without an unexpired registered prospectus. Section 275(1A) adds a route defined by size: securities acquired by a person as principal may only be acquired at a consideration of not less than S$200,000 for each transaction. Under section 275(4), MAS may substitute a different amount by order in the Gazette.

Section 4A(1) says who an accredited investor is. For an individual there are three alternative tests: net personal assets exceeding S$2 million in value, financial assets net of related liabilities exceeding S$1 million, or income in the preceding 12 months of not less than S$300,000. Each may be met by its equivalent in a foreign currency. A corporation qualifies with net assets exceeding S$10 million.

One detail of the first test matters where much of a person's wealth is the home. Under section 4A(1A), a primary residence counts towards net personal assets only up to S$1 million. As a worked example, assume an individual whose home is worth S$3 million net of the mortgage and who holds S$0.7 million of other net assets. The simple total is S$3.7 million, but for the test the home counts as S$1 million, giving S$1.7 million, below the S$2 million line. That person would need to meet the financial assets or the income test instead.

The S$200,000 minimum can be read the same way. In an illustrative offer raising S$6 million entirely under section 275(1A), with every buyer paying the minimum, there would be 30 buyers: S$6 million divided by S$200,000.

Resale limits, and what an exemption does not remove

An exemption applies to an offer, not to the securities for the rest of their life. Section 276 restricts the resale of securities acquired under sections 274 or 275 for 6 months from the date of the initial acquisition. Section 276(3) restricts transfers by certain corporations within 6 months of acquisition, and section 276(4) applies the same 6-month restriction to certain trusts. Section 276(7) provides exceptions for listed securities of the same class.

Three other provisions complete the picture. Under section 280A, MAS may require information about exempt offers by regulation. Under section 281, MAS may revoke an exemption, and a person affected may apply for a review within 14 days of the revocation. And section 282 preserves liability under the Companies Act 1967 and under Part 12 of the Securities and Futures Act for transactions under exempted offers. An offer that needs no prospectus is still an offer for which the people behind it answer under those provisions.

Project Guardian and MAS's tokenisation documents

MAS's main public initiative on tokenisation read for this guide is Project Guardian. Its page on the project, which carries the date 19 October 2022, describes it as a collaborative initiative with the financial industry that tests the feasibility of asset tokenisation and decentralised finance applications while managing risks to financial stability and integrity.

The page says the pilots involve traditional financial institutions and fintech firms in Singapore and in other jurisdictions. The areas of work it names are securities in the form of digital bearer assets, tokenised deposits issued by deposit-taking institutions, and digital assets traded across platforms, together with a rulebook, a governance model and technical standards such as trust anchors.

Two things are absent from that page. It does not mention real estate or property, and it makes no statement about the regulatory status of the pilots. Nothing on it says that a pilot, or a product modelled on one, is outside the Securities and Futures Act.

MAS's website also lists documents whose titles show where its published work has gone since: a "Guide on the Tokenisation of Capital Markets Products", a "Guardian Fixed Income Framework" with a version marked November 2025, a "Guardian Funds Framework", a paper titled "Operationalising Tokenised Funds", and a 2024 media release headed "MAS Announces Plans to Support Commercialisation of Asset Tokenisation". Those documents could not be opened for this guide. Their titles concern fixed income and funds; whether any of them addresses real estate directly is not established here.

The Residential Property Act still decides who may hold a home

Securities law governs the offer. It does not decide who may hold an interest in Singapore residential land. That is the work of the Residential Property Act 1976, whose long title describes it as an Act to restrict the purchase or transfer of residential properties, including vacant land, to citizens of Singapore and approved purchasers.

The core rule is section 3(1). A person must not transfer residential property, or any estate or interest in it, to a foreign person, and must not create a trust for sale of such property in favour of a foreign person. A foreign person must not acquire such property except by way of a mortgage, charge or reconveyance. The Act's definition of "to transfer" includes creating a trust by declaration.

"Foreign person" is defined by exclusion: anyone who is not a citizen of Singapore, a Singapore company, a Singapore limited liability partnership or a Singapore society. The definition of "Singapore company" is strict. The company must be incorporated in Singapore and its directors and members must all be citizens. For a share held on trust, "member" includes the beneficiary of the trust. A company that owns a restricted home and then admits foreign members is the situation section 9 addresses: a Singapore company, partnership or society that owns restricted residential property must have the written approval of the Controller of Residential Property before it converts into a foreign entity. Under section 9(7), converting without approval carries a fine not exceeding S$50,000 for the entity, and the same fine or up to 3 years' imprisonment for the responsible person, with a duty to transfer the property within 1 year or seek approval to keep it.

"Residential property" itself is wide. It includes vacant land, premises permitted or lawfully used as a dwelling house, and land zoned residential in the Master Plan. It excludes industrial or commercial land and premises, and hotels registered under the Hotels Act 1954. Commercial premises are therefore outside this definition; nothing in it takes a token tied to them outside the Securities and Futures Act.

Section 4(1) opens the well-known exceptions. The Act does not apply to a foreign person's acquisition of a flat in a building in a residential development other than a landed dwelling house, a unit in a development shown as a condominium on an approved plan, or a unit in an executive condominium development. Section 4(2) then limits the exception. Without the Minister's prior approval, a foreign person must not acquire all the flats in a building or development, or all the units in a condominium or executive condominium development. The fine under section 4(3) is up to S$100,000, and the section provides for a notice to divest within 6 months. Section 4(7) excludes from that limit leases or agreements for a term not exceeding 7 years, including options to renew.

The provision that speaks most directly to holding structures is section 23. A citizen or approved purchaser must not buy or acquire residential property, other than non-restricted residential property, as a nominee for a foreign person with the intention of holding it on trust for that person, and a foreign person must not appoint a citizen or approved purchaser as nominee for that purpose.

Under section 24 the Registrar may suspend registration of a transfer that contravenes the Act, which a court may then declare void. A foreign person approved under sections 25, 30 or 31 is an "approved purchaser", but the application process and its criteria were not in the text read for this guide.

None of these sections mentions tokens. They are written in terms of estates, interests, trusts, nominees and the membership of companies, and that is the language in which a token structure over a home would have to be read.

What the sources read here do not settle

Several parts of the picture were out of reach for this guide, and a reader should treat them as unanswered here, not as answered in the negative.

• The division of the Securities and Futures Act on collective investment schemes: authorisation of a scheme, the roles of manager and trustee, the regime for real estate investment trusts, and the exemptions for offers of units with their own limits.
• Licensing. The Act defines a capital markets services licence as a licence granted by MAS under section 86 to carry on business in a regulated activity, and a regulated activity as one specified in the Second Schedule. The MAS reply of February 2022 says a token that is a collective investment scheme is subject to licensing and business conduct requirements. Which activities around a property token need which licence was not read.
• MAS's own guides and Project Guardian frameworks, named above by title only.
• How the Residential Property Act is applied to an interest held through a token, on which the text read is silent.

A property token meets two statutes: one asks what the holder was sold, the other asks who may hold the land.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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