Regulatory Policy – Approval of Tokenised Funds

Summary

This CIMA Regulatory Policy sets out the criteria and process the Authority will use to approve Tokenised Funds registered or licensed under the Mutual Funds Act or Private Funds Act. It applies where a fund intends to issue Digital Equity Tokens or where CIMA determines during an application review that a proposed structure constitutes a Tokenised Fund. It should be read alongside the MFA, PFA, VASPA, AML Regulations and the related Rule and Statement of Guidance on Tokenised Funds.

• Application process: Applicants must submit a completed Tokenised Fund Questionnaire via the REEFS platform; CIMA will review the offering document, VASPA applicability, governance and business continuity arrangements, and may request further information or consult other regulators.
• Assessment criteria: CIMA assesses whether the tokenisation arrangement complies with applicable Acts, protects investors, is supported by sound governance and risk management, preserves the integrity of the fund's register, and provides adequate disclosure without creating material regulatory or operational risk.
• Conditional approval: If CIMA approves subject to conditions, the applicant must provide written confirmation of acceptance within five business days or the application may be returned.
• Ongoing relations with CIMA: Operators must keep complete, auditable records of token issuance, transfers and redemptions, and must promptly notify CIMA of token impairment events, inability to redeem tokens within a reasonable period, or other events materially affecting the fund's operation, as well as any material changes to the approved tokenisation arrangements.

The Policy is stated to take effect upon gazettement, though the specific gazettement date is not given in the text.

Key obligations

• Applicants seeking to operate as a Tokenised Fund must submit a completed Tokenised Fund Questionnaire through the REEFS platform.
• Applicants must ensure all information and supporting documentation submitted to CIMA is complete and accurate.
• Where CIMA grants conditional approval, the applicant must provide written confirmation of acceptance within five business days, or CIMA may return the application.
• Operators must securely maintain complete and accurate records of token issuance, transfers and redemptions capable of independent audit via blockchain or other distributed ledger.
• Operators must promptly notify CIMA where issued tokens become impaired due to blockchain infrastructure failures or disruptions.
• Operators must promptly notify CIMA where the fund is unable to redeem tokens within a reasonable period, or where any other event occurs that may materially affect the fund's operation.
• The Tokenised Fund must notify CIMA as soon as reasonably practicable of any material changes affecting the approved tokenisation arrangements or the basis of CIMA's approval.

Applies to

Applicants seeking registration under the Mutual Funds Act or Private Funds Act, Regulated Entities seeking approval to operate as a Tokenised Fund, Tokenised Funds, Fund Operators

Deadlines

• five business days: Applicant must provide written confirmation of acceptance of conditional approval within five business days of notification, or the application may be returned.
• upon gazettement: The Policy becomes effective upon gazettement.