Cryptocurrency service providers should not promote their services to public, says MAS as it warns of ‘high risks’

SINGAPORE: Service providers of digital payment token (DPT), or more commonly known as cryptocurrency, should not promote their services to the general public in Singapore, the Monetary Authority of Singapore (MAS) said on Monday (Jan 17).

This includes placing any form of advertisements or promotional materials in public areas, such as public transport and related venues, public websites, broadcast and print media, and the provision of physical automated teller machines (ATMs).

Service providers should also not be engaging third parties, like social media influencers, for joint promotional campaigns to solicit new customers, said the central bank as it issued new guidelines to "discourage" cryptocurrency trading by the general public.

According to the guidelines, digital payment token service providers can only market or advertise on their own corporate websites, mobile apps or official social media accounts.

“MAS strongly encourages the development of blockchain technology and innovative application of crypto tokens in value-adding use cases. But the trading of cryptocurrencies is highly risky and not suitable for the general public,” said the central bank’s assistant managing director for policy, payments and financial crime Loo Siew Yee.

"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.”

Examples of digital payment tokens are cryptocurrencies like Bitcoin. A digital payment token service includes the buying or selling, or providing a platform to allow people to exchange such tokens in Singapore.

The definition of such services will also be expanded to include the transfer of digital payment tokens and provision of custodian wallet services for such tokens when the amendments to the Payment Services Act take effect, said the central bank in a press release.

Digital payment token service providers include payment institutions, banks and other financial institutions, as well as applicants under the Payment Services Act.

So far, MAS has granted four firms the licence to provide digital payment token services out of a pool of about 180 applicants. They are local fintech firm Fomo Pay, Australian cryptocurrency exchange Independent Reserve, local bank DBSs brokerage arm DBS Vickers, and Singapore-based cryptocurrency payments provider Triple A.

Singapore's regulations of digital payment token service providers are geared primarily towards protection against money laundering and terrorism financing. Digital payment tokens are not subject to consumer protection measures.

MAS said it has consistently warned that the trading of digital payment tokens are “highly risky and not suitable for the general public” given how the prices of these tokens are subject to sharp speculative swings.

It added that it has also observed "some" providers actively promoting their services through online and physical advertisements, or through the provision of physical ATMs in public areas.

Such behaviour could “encourage consumers to trade digital payment tokens on impulse, without fully understanding the attendant risks”, it said, without naming these companies.

MAS stressed that digital payment token service providers "should conduct themselves with the understanding that trading of DPTs is not suitable for the general public".

“In view of the rapidly changing landscape for DPT services in Singapore, MAS will continue to review the provision of DPT services to the public by DPT service providers and may update these guidelines as necessary," it said.

The Singapore FinTech Association (SFA) said the new guidelines indicate that Singapore continues to see blockchain and cryptocurrencies “as innovations that have the potential to gain mass adoption in the community”.

But it is imperative that such adoption is “balanced with pragmatic guardrails and a system of consumer protections aiming to create a more sustainable market environment”, the statement added.

“We will continue to work with MAS and key stakeholders within the fintech community to ensure the smooth and positive development of the DPT environment and to drive innovation that brings true value and benefits to the Singapore community,” said SFA president Shadab Taiyabi. 

Mr James Shanahan, chairman of SFA’s payments group sub-committee, agreed, describing the new guidelines as bringing “increased stability and pragmatism” to a rapidly evolving blockchain and cryptocurrency industry.

They also do not signal a shift in Singapore’s approach to cryptocurrencies. “Rather, we see this as further evidence of Singapore's long-term commitment to the industry,” he said.