BACKGROUND

On 8 October 2024, Monetary Authority of Singapore (MAS) issued an update to the FAQs on the Definition of Accredited Investor and Opt-in Process which allows financial institutions (“FIs”) to recognise the value of digital payment tokens (DPTs) in assessing the net personal assets of individuals to determine their accredited investor (“AI”) status. The popular examples of DPTs include Bitcoins, Ether, Litecoin, Dash, Monero, Ripple and Zcash.

 

KEY POINTS

 

DPTs Valuation Methodology

With effect from 4 October 2024, FIs should adopt the following methodology in evaluating digital payment tokens (“DPTs”), as part of determining the AI eligibility based on an individual’s net personal assets:

a)    Applying a minimum 50% haircut to the market value of DPTs holdings, and

b)    Taking the value of DPTs as the lower of

(i)   the adjusted value after applying the haircut, or

(ii)  S$200,000.

Furthermore, FIs should disclose the methodology used and apply it consistently across all its customers.

This treatment does not apply to MAS-regulated stablecoins.

(Stablecoins are digital payment tokens designed to maintain a constant value against one or more specified fiat currencies.)

 

Example of an Eligible AI

Investor Profile

Name: John

Net Assets: S$1.8 million

Market Value of DPTs: S$500,000

 

Evaluation

50% Haircut: Adjusted Value = S$500,000 × 50% = S$250,000

Eligible Valuation: Lower Value = S$250,000 vs. S$200,000 = S$200,000

 

Conclusion

Total Eligible Net Assets = S$1.8 million + S$200,000 = S$2 million.

John qualifies as an AI.

 

Re-assessment of DPTs valuation

FIs are required to re-assess the client’s AI eligibility based on the DPT valuation methodology if the client’s DPT holdings were previously considered in an assessment before 4 October 2024.

FIs can use their existing records to review whether the investors still meet the AI thresholds after applying the DPT valuation methodology. If the review indicates that a client may not meet the revised AI threshold, the FI should engage the client to establish the individual’s AI eligibility, including obtaining any relevant independent documentary proof.

If the FI determines that a client is unable to meet the revised AI threshold, the FI should not enter any new transactions with the client, on the basis that the client is an AI. FIs should ensure that their records accurately reflect the client’s revised status after the re-assessment.

Re-assessment Completion Deadline: 4 July 2025

 

WHAT’S NEXT?

Management should ensure that:

(i)    AI-related policies are updated

(ii)   Enhance their AI verification procedures

(iii) Review their existing AI data, including engaging with AI customers to update their account information

And more…

 

HOW CAN WE HELP?

Contact Us today to discuss how we can advise your Accredited Investors management. Find out more here.