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  • Digital Tokens

    • CRA-15.1.2

      All offers of digital tokens which exhibit the characteristics of a security are regulated by the CBB.

      Added: April 2023

    • CRA-15.1.3

      While determining whether a digital token qualifies as a security, the CBB will examine the underlying economic purpose of the digital token, its structure and characteristics, including the rights attached to the digital token. For the avoidance of doubt, a digital token may be considered:

      (a) Equivalent of an equity security: where it confers or represents ownership interest in the issuer or gives entitlement to share in the issuer's profit; or
      (b) Equivalent of a bond or debt security: where it constitutes or evidences the indebtedness of the issuer of the digital token in respect of any money that is lent to the issuer by the digital token holder, its maturity is fixed, is redeemable at maturity and gives entitlement to share in interest distributed by the digital token issuer.
      Added: April 2023

    • CRA-15.1.4

      In order to determine whether a digital token is considered a security, the CBB shall, amongst other things, take into consideration the following:

      (a) Does it give the digital token holder an entitlement against the digital token issuer? If so, is the entitlement in kind or a monetary entitlement? If it is monetary entitlement, is it profit sharing, a predetermined entitlement, or an undetermined other kind of entitlement?
      (b) Does the digital token represent a monetary claim on the digital token issuer?
      (c) Is the digital token transferable?
      (d) Does it confer decision power on the project of the digital token issuer?
      Added: April 2023

    • CRA-15.1.5

      The guidance provided are indicative and not exhaustive and, the CBB may take into consideration additional factors while assessing an application for issuance of a digital token. A digital token shall be considered a security if it is either a utility token or an asset token and exhibits the following characteristic:

      (a) Utility tokens: A utility token shall be considered a security if it has an investment purpose at the point of issue or it has the potential to become investment objects. To this end, utility tokens which are transferable shall be considered as securities.
      A utility token shall not be treated as a security if its sole purpose is to confer digital access rights to an application or a service, and if the utility token can actually be used in this way at the point of issue. In such cases, the underlying function is to grant access rights and the connection and resemblance to an equity security or debt security is absent.
      (b) Asset tokens: An asset token shall be treated as a security where it:
      (i) gives rights to financial entitlement and exhibits features of either bonds or equity securities: the former if the entitlement is a predetermined cash flow; and the latter if the entitlement is a share in profit;
      (ii) gives right to an entitlement in kind, and the token holder holds decision making powers in the project.
      Added: April 2023