Don't target general public for business, MAS tells crypto service providers
CRYPTO service providers should not provide their services to the general public in Singapore, the Monetary Authority of Singapore (MAS) said on Monday (Jan 17), as it launched guidelines to discourage crypto trading by the man on the street.
Under these new guidelines, which are effective immediately, digital payment token (DPT, or more commonly known as cryptocurrency) service providers should not market or advertise DPT services in public areas in Singapore, such as on public transport, public transport venues, public websites, social media platforms, broadcast and print media, or provision of physical automated teller machines (ATMs).
They also should not be marketed through the engagement of third parties like social media influencers.
These guidelines apply to DPT service providers, including banks and other financial institutions, DPT service providers licensed under the Payment Services Act, as well as entities whose applications are currently under review by MAS.
There are no financial penalties for non-compliance, MAS said in response to queries. But regulated entities are "generally understand that they are expected to comply" with MAS guidelines.
"MAS will consider non-compliance as part of our regular supervisory engagement with the regulated entities," it said.
It added that it will consider legislating requirements if necessary "to achieve the policy objectives".
Foreign companies are also not allowed to actively offer or advertise DPT services to people in Singapore. MAS said it "will not hesitate" to take actions against those who do, such as by naming them on the Investor Alert List on its website.
The guidelines come after MAS has observed some service providers "actively promoting" their services through online and physical advertisements, as well as via physical ATMs in public areas.
"This could encourage consumers to trade DPTs on impulse, without fully understanding the attendant risks," the authority said in a statement on Monday.
DPT service providers can market or advertise on their own corporate websites, mobile applications and official social media accounts. This must not be done in a way that "trivialises the risks of trading in DPTs in a manner that is inconsistent with, or contradicts, the risk disclosures under the Payment Services Act", MAS said.
"MAS has consistently warned that trading DPTs is highly risky and not suitable for the general public, as the prices of DPTs are subject to sharp speculative swings," it said.
MAS' assistant managing director for policy, payments and financial crime Loo Siew Yee said that while MAS "strongly encourages" the development of blockchain technology and innovative applications of crypto tokens, crypto trading is "highly risky and not suitable for the general public".
"DPT service providers should therefore not portray the trading of DPTs in a manner that trivialises the high risks of trading in DPTs, nor engage in marketing activities that target the general public," she said.
MAS said it has received about 180 applications to provide DPT services since the Payment Services Act came into force in January 2020. Five of these have been awarded in-principle approvals, 60 have been withdrawn, and 3 have been rejected. The licensed service providers include DBS's securities and derivatives brokerage DBS Vickers Securities, payment fintech Fomo Pay, and Australia-headquartered crypto exchange Independent Reserve.
In response to the new guidelines, the Singapore FinTech Association (SFA) said the Republic's adoption of new innovations like blockchain and cryptocurrencies must be "balanced with pragmatic guardrails" and a system of consumer protections to create a sustainable market environment.
James Shanahan, who chairs the SFA's payments group sub-committee, said in a statement on Monday that the new guidelines "will bring increased stability and pragmatism to the rapidly evolving blockchain and cryptocurrency industry, and do not signal a shift in Singapore's approach to DPTs".
"Rather, we see this as further evidence of Singapore's long-term commitment to the industry. Singapore remains firmly open to the development of the industry, and is committed to being a hub for fintech, blockchain, cryptocurrency and payment innovations," Shanahan said.
Clemen Chiang, who set up Bitcoin Institute, a non-profit platform for crypto education, said that while the guidelines may lead to a "small dent" on businesses, regulators do need to offer clarity on digital currencies to facilitate commercialisation. "One of the areas that I want to highlight is that crypto trading should not be treated as gamification," he said, citing US-based online brokerage Robinhood as a case in point.
Huobi Singapore's chief executive Edward Chen said his platform "proactively" provides users with risk warnings on the volatility of DPTs, and that they should buy DPTs "only if they are prepared to accept the risk of losing all of the money they put into such tokens". Huobi Singapore has also been working with local ecosystem partners to promote blockchain education, Chen said.
Celebrities outside Singapore have been sued over their promotion of crypto schemes. A recent class-action lawsuit filed in a California court accused reality TV star Kim Kardashian, boxer Floyd Mayweather and basketball player Paul Pierce of making "false or misleading statements to investors", leading them to buy into a cryptocurrency known as EthereumMax, only to sell when prices were heavily inflated.
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