Security Token Offering Guidelines Issued By Mauritius FSC

News, Regulation | April 11, 2019 By:

The Mauritian Financial Services Commission (FSC) has issued a guidance note regarding the statutory requirements applicable to security token offerings (STO).

The guidance note, the second in FSC’s FinTech Series issued under section 7(1)(a) of the Financial Services Act 2007, was issued in response to the queries from various stakeholders and highlights the regulatory approach of the FSC in relation to STOs.

“Securities tokens” are “securities” as defined in the Securities Act 2005, represented in digital format,” the FSC said. “When STOs are conducted in or from within Mauritius, the offering of such Securities Tokens shall be subject to the Securities Act 2005 and any Regulations or FSC Rules issued thereunder including the requirement for a prospectus, as may be applicable.”

The FSC said that while no STO can take place without its authorization, STOs targeting sophisticated or expert investors and funds, or professional and specialized collective investment schemes are not required to obtain prior approval from the commission.

“Any person soliciting another person to enter into transactions involving Securities Tokens shall be required to hold the appropriate license under the Securities Act 2005 and shall be required to ensure, at all times, strict compliance with the applicable regulatory requirements,” the FSC said. “The FSC wishes to highlight that carrying out financial services without a license is a criminal offense.”

The regulator concluded by warning investors about the high-risk nature of STOs. It urged all prospective investors to fully ascertain the related risks prior to committing any funds for investment in securities tokens.

“The FSC hereby informs investors that any investment in Securities Tokens is at their own risks and that they are not protected by any statutory compensation arrangement in Mauritius,” the FSC said.