SINGAPORE Trends and Developments Contributed by: Jansen Chow and Ang Leong Hao, Rajah & Tann Singapore
MAS has signalled that it will set a high bar for licens - ing and will generally not issue licences to digital token service providers whose substantive regulated activities are outside Singapore. The stated rationale is that the money laundering risks associated with such business models are higher and MAS is unable to effectively supervise persons whose operations are substantially conducted abroad. The introduction of these licensing requirements has two practical implications for fraud and asset recovery. First, the forced wind-down of operations by digital token service providers who are unable to obtain a licence may generate a new wave of litiga - tion regarding breach of contract and the return of customer assets, similar to the issues that arose in the liquidation of Eqonex Capital in Re Taylor . Second, as licensed providers, digital token service providers will be subject to MAS regulatory oversight, which may extend to additional disclosure obligations that could facilitate pre-action discovery applications and other investigative steps by fraud victims in the future. Conclusion The recent developments reveal several clear trends. First, courts are refining the “real risk of dissipation” requirement for obtaining Mareva injunctions, insist - ing on specific evidence of unjustified dealings rather than generic, speculative factors that may not point to a dissipation risk.
Second, digital asset law has matured rapidly. Cryp - tocurrency is definitely recognised as a chose in action capable of being held on trust, while situs is determined by the residence of the person control - ling the private key. However, the Court still applies established legal principles, even in the face of novel issues relating to cryptocurrency that are on the rise, as seen in: • cases involving cryptocurrency; and • cases where cryptocurrency is an asset concerned in liquidation. Regulatory-wise, FSMA licensing will create new com - pliance challenges and litigation avenues. These developments confirm Singapore’s continued evolution as a sophisticated jurisdiction for interna - tional fraud and asset recovery. When confronted with the novel features of cryptocurrency disputes, however, the courts have reasoned from first princi - ples, applying established doctrines in a principled yet pragmatic manner. Practitioners will need to stay abreast of these rapidly developing principles as tra - ditional fraud remedies, digital asset innovation and expanding regulation continue to generate novel questions of law.
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