PolicyPal’s ICO Jitters

Singapore-based insurance technology venture PolicyPal is facing some headwinds related to its recently completed ICO. Allegations of fraud have emerged regarding the firm’s digital token sale, which had reportedly raised $US20 million last month.

An account republished by the publication Coin5S alleges that the firm’s ICO had breached Singapore’s Securities and Futures Act (SFA). But Val Ji-Hsuan Yap, the CEO and co-founder of PolicyPal, has issued a statement denying this.

The account alleges that the PolicyPal Network, which announced in a Medium post that it had raised 23,809 ETH (~US$20million) through its token offering, had engaged in behaviour that mislead investors, with the digital tokens actually representing security instruments which in turn were a violation of the SFA.

Originally published on Medium by an individual or group operating under the identity of “Martina Johnson”,  who claims to be a fintech executive, the original post has since been deleted. Neither the Monetary Authority of Singapore (MAS) nor Yap responded to requests for comments.

However, Yap issued a public statement in response to these allegations on 25 April 2018, Wednesday, in which she maintained that “…the ICO was conducted in consultation with our Singapore legal advisers, Dentons Rodyk & Davidson LLP, and in accordance to, and abides by, all applicable laws and regulations in Singapore,” maintaining that it followed the guidelines stipulated by MAS  in a November 2017 publication.

With the ICO, PolicyPal aims to address issues related to the crypto-asset and insurance sectors. PolicyPal Network is a platform develop to address what it perceives as key issues overlapping the domains of both insurance and cryptocurrencies.

Highlighting the benefits in terms of greater efficiencies and reduced transaction costs, Yap had earlier stated in a Telegram channel that the use of smart contracts in combination with trusted third-party data sourced would enable automated policy claim processing, as well as serve to reduce insurance fraud.

However, based on reviews of the token sale on ICO DropsICO Bench, and Tech Insider, reception of the token sale was mixed, with some user comments ranking it highly, while others raised concerns over the technical implementation of the token network.

Concerns were also raised in regards to what users perceived as “vague claims” in the the white paper, the lack of a minimum viable product and the capacity of PolicyPal to negotiate different regulatory environments as it expands to new markets.

Founded in April 2016, PolicyPal is backed by early-stage VC 500 Startups, which invested an undisclosed amount of seed capital in the firm in early 2017 through its Southeast Asian fund, 500 Durians.

PolicyPal enable users to manage insurance-related paperwork, with features that allow users to monitor the renewal dates of insurance policies and when premium payments are due. It claims that it uses artificial intelligence (AI) to simplify and digitise insurance policies from different insurers and offer personalised recommendations on different insurance policies.

The insurance startup is the first venture to graduate from the MAS financial technology (fintech) regulatory sandbox – it entered the 6-month programme in March 2017 – and started operating as a registered direct insurance broker and exempt financial adviser under its subsidiary BaoXianBaoBao in September 2017.

The MAS-launched sandbox is meant to encourage fintech experimentation by financial institutions (FIs) and fintech firms with financial products or services in the market and includes safeguards to contain potential fallout from fintech failures.

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