An initial coin offering (ICO) has been stopped in its tracks by the regulator as it broke rules governing securities and futures contracts.
The ICO issuer has returned all funds received from Singapore-based investors.
The Monetary Authority of Singapore (MAS) declined to name the ICO and it is not clear how much was taken from investors or when the offering was issued.
The MAS also warned eight exchanges here that allow digital tokens - known as cryptocurrencies - to be traded.
It said these exchanges must consult the MAS before trading in digital tokens that are deemed to be securities or futures contracts.
Instead of selling company equity to investors, ICO issuers raise funds by taking in well-known cryptocurrencies such as Bitcoin and Ethereum or traditional money in exchange for their own currencies, known as digital tokens.
MAS guidelines suggest that many digital tokens that promise a form of return are, in effect, securities so they must follow rules that govern shares, units of real estate investment trusts and bonds.
In the latest case, the MAS said that "the issuer had contravened the Securities and Futures Act (SFA) as its tokens represented equity ownership in a company and therefore would be considered as securities under the SFA".
It added that the offer was made without a MAS-registered prospectus, which is a SFA requirement.
The MAS said that if the digital tokens constitute securities or futures contracts, the exchanges must immediately cease them until they have been authorised as an approved exchange or recognised market operator.
Mr Lee Boon Ngiap, assistant managing director (capital markets) at the MAS, said in a statement: "The number of digital token exchanges and digital token offerings has been increasing. We do not see a need to restrict them if they are bona fide businesses.
"But if any digital token exchange, issuer or intermediary breaches our securities laws, MAS will take firm action.
"The public should be aware that there is no regulatory safeguard if they choose to trade on unregulated digital token exchanges or invest in digital tokens that fall outside the remit of MAS' rules."
Few venture capitalists or private investors have been in favour of ICOs, given concerns over the hysteria surrounding digital currency.
Ms Stefanie Yuen Thio, joint managing partner at TSMP Law, backed the MAS move: "This is absolutely the right thing to do.
"There's no point having regulations if you don't enforce them with a firm hand.
"And while Singapore is seen as progressive with our fintech regulatory sandboxes, we risk being labelled a 'cowboy marketplace' if our enforcement is not robust."
She noted that as long as a digital token offers a right to a return on a regulated form of investment, then it falls under capital markets regulation and requires a prospectus.
"This is to protect investors by ensuring that the fundamental financial, business and risk disclosures are included," she said.
