Tokenised funds in a VCC: how MAS's tokenisation guide, Project Guardian and the fund tax rules apply

A tokenised fund in a Singapore Variable Capital Company (VCC) is a sub-fund whose shares, or interests in them, are recorded and transferred as digital tokens on a distributed ledger. Tokenisation changes the form in which the interest is held and moved; it does not change the legal character of what is offered. MAS's position is that tokenised units in a collective investment scheme (CIS) fall under the same securities rules as conventional units, so the manager still needs a fund management licence, an offering route under Part 13 of the Securities and Futures Act (SFA), independent custody and the same investor disclosures, plus additional work on token custody, trading venues and technology risk.

Same product, same rules

MAS's Guide on the Tokenisation of Capital Markets Products (last revised 14 November 2025, replacing the earlier Guide on Digital Token Offerings) states that "offers of tokenised CMPs that constitute securities, securities-based derivatives contracts or units in a CIS are subject to the same regulatory regime under Part 13 of the SFA" as their non-tokenised equivalents (§3.1). For a CIS, the authorisation or recognition requirements also apply (§3.3).

The guide's case studies make the fund-management point directly: where a token represents an interest in a CIS, it is a unit in that CIS, and the person managing it "will likely require a capital markets services licence for carrying on business in the regulated activity of fund management". For a VCC this aligns with the existing rule that every VCC appoints a fund manager regulated by MAS.

Offering tokenised shares: exemptions and disclosures

Because the offer rules are unchanged, most tokenised VCC sub-funds aimed at professional investors use the same exemptions as conventional private funds. The tokenisation guide lists (§3.4):

1. Small (personal) offers not exceeding S$5 million within any 12-month period.
2. Private placements to no more than 50 persons within any 12-month period.
3. Offers to institutional investors only.
4. Offers to accredited investors.

Each is "subject to certain conditions which include advertising restrictions". A public website or social media campaign for a tokenised fund can therefore breach an exemption in the same way it would for a conventional fund. For CIS offers, MAS's restricted scheme route requires notification through the CISNet portal before the offer and an information memorandum with salient information, and the scheme must lodge a declaration every 12 months to keep the exemption (MAS, Offers of Collective Investment Schemes, page updated 5 October 2026). Being entered on MAS's list of restricted schemes is a notification outcome, not an approval of the fund.

Where a prospectus is required, MAS expects it to include information on risks arising from the token's features, such as custody arrangements and the underlying technology (§3.6). Even under an exemption, the information memorandum should explain the same points. Investor onboarding is covered in fundraising and KYC.

Custody, wallets and secondary trading

Tokenisation adds regulated-activity questions around who holds tokens and where they trade.

• Custody of tokens. The guide states that a person holding or controlling clients' specified products may be "providing custodial services", which requires a CMS licence unless an exemption applies (§4.5). A fund that keeps investors' tokens in wallets it controls, or a platform doing so, needs to check this.
• Fund assets in digital form. Where the sub-fund itself invests in digital assets, SFA 04-G05 expects disclosure of price, liquidity, volatility, intermediary and custody risks, and states that FMCs "should segregate customers' assets and store bulk of the assets in cold wallet" (§4.1.4, last revised 3 September 2025).
• Secondary trading. A platform where tokens are traded may constitute an organised market, which must be an approved exchange or recognised market operator unless exempt (§4.4). Tokenisation may enable transfers between eligible holders, subject to platform licensing and market availability; it does not by itself create liquidity.
• Transfer controls. Smart contracts often whitelist wallets that have passed KYC and investor-eligibility checks, so that transfers outside the eligible class fail.

Project Guardian and the Guardian Funds Framework

Project Guardian is MAS's collaboration with industry on asset tokenisation. On 4 November 2024 MAS stated it had brought together "over 40 financial institutions, industry associations and international policymakers", and announced the Guardian Funds Framework (GFF), which "provides a set of recommendations for industry best practices for tokenised funds", including a Guardian Composable Token Taxonomy.

For a VCC manager, GFF is a design reference for how tokens are classified and described, not a licensing condition; following it, or participating in Project Guardian, does not change a fund's regulatory status or replace the SFA analysis above. A practical way to use industry frameworks is to treat them as a checklist alongside the legal work:

1. Token description. Does the information memorandum state plainly what right the token represents, using consistent terms across the documents and the smart contract?
2. Register reconciliation. Is it clear which record prevails if the ledger and the register of members differ?
3. Interoperability. Can tokens move between platforms or wallets, and does each venue meet SFA market rules?
4. Operational resilience. What happens to dealing and NAV if the ledger or platform is unavailable?

This page does not name or assess specific tokenised fund products or platforms.

Tax: tokenised designated investments

Tax schemes look through form to substance. In FDD Cir 05/2026 Annex 12 FAQ 9 (31 July 2026), MAS states that tokenised interests in existing designated investments "would also qualify as DI, to the extent that it confers the same interests, rights and obligations as direct ownership of the underlying DI". MAS's example is a tokenised interest in a real estate investment fund, which must give the holder the right to share in that fund's profits.

Practical implications:

1. A sub-fund holding tokenised bonds or fund interests that mirror the underlying rights is treated as holding those designated investments for 13O/13U purposes, if all other conditions are met each basis period.
2. Tokens that confer only partial or synthetic rights need separate analysis.
3. For the tax character of digital tokens more generally, MAS refers to IRAS's e-Tax Guide on the income tax treatment of digital tokens.

The tax position of investors in their home jurisdictions, including Hong Kong or mainland China, is separate; obtain advice where each investor is resident.

What this page does not cover. This page does not cover licensing for token issuance platforms, payment tokens or stablecoins, and does not evaluate tokenisation vendors. VCC regulations generally are covered at vccfund.com.sg; domicile comparison at vccfund.sg/compare (in Chinese). For the six-strategy comparison see compare; for who does what in operations, see the operating model; for quick answers, see the FAQ.

To interpret this for a specific fund, you can register your enquiry through the contact options on this site.