Compliance

Compliance Corner: Monetary Authority Of Singapore, Cryptos

Editorial Staff, 19 January 2022

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The latest compliance news: regulatory developments, punishments, guidance, permissions and new product and service offerings.

MAS
The Monetary Authority of Singapore has set out rules designed to clamp down on retail investors' use of cryptocurrencies.

Owing to concerns over potential abuses, the Asian city-state's regulator set out a number of rules yesterday to limit cryptocurrency trading service providers from promoting their services to the general public.

The interest in cryptocurrency continues to grow at a time when awareness over what these are has increased. Cryptocurrencies are highly volatile and their use has also raised concerns about money-laundering and other potential abuses, although moves towards negative official interest rates, large-scale central bank quantitative easing, and other market forces, means that there is an audience for alternative monetary forms.

In a bid to shield retail investors from potential risks, MAS has ordered companies not to engage in marketing or advertising digital payment token (DPT or cryptocurrency) services in public areas in Singapore or through the engagement of third parties, such as social media influencers, to encourage DPT services to the general public.

The guidance clarified that DPT service providers were payment institutions, banks and other financial institutions, as well as applicants as specified under the Payment Services Act. DPT services include buying or selling DPTs or facilitating the exchange of DPTs. The definition of DPT services will be expanded to include the transfer of DPTs, provision of custodian wallet services for DPTs, and facilitating the exchange of DPTs without possession of moneys or DPTs by the DPT service provider, when the amendments to the PS Act take effect.

MAS said it has consistently warned that trading DPTs is highly risky and not suitable for the general public because the prices of DPTs are subject to sharp speculative swings. The regulator noted that some DPT service providers have been actively promoting their services through online and physical advertisements or through public cash machines. This could encourage consumers to trade DPTs on impulse, without fully understanding the attendant risks, the MAS said.

DPT service providers should not advertise or market DPT services in public areas in Singapore such as through ads on public transport, public transport venues, public websites, social media platforms, broadcast and print media, the provision of physical ATMs; or by engaging third parties such as social media influencers, DPT service providers can only market or advertise on their own corporate websites, mobile applications or official social media accounts, according to the guidelines, MAS said.

“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. 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,” Loo Siew Yee, MAS assistant managing director (policy, payments and financial crime), said.

 

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