SINGAPORE - The trading of digital payment tokens (DPTs), commonly known as cryptocurrencies, is highly risky and not suitable for the general public, said the Monetary Authority of Singapore (MAS) as it issued a new set of guidelines on Monday (Jan 17) to rein in cryptocurrency service providers.

The guidelines, which take effect immediately, seek to curb cryptocurrency trading being promoted to the public.

MAS said cryptocurrency service providers should not market or advertise their services in public areas in Singapore, such as through advertisements on public transport, public transport venues, public websites, social media platforms, and broadcast and print media.

They also should not engage third parties such as social media influencers to promote their services.

They can market or advertise only on their own corporate websites, mobile applications or official social media accounts.

Nor should DPT service providers offer physical automated teller machines (ATMs), said MAS. A cryptocurrency ATM allows one to connect to a cryptocurrency account to buy and sell cryptocurrency, and there are fewer than 10 ATMs here today. However, MAS has not stipulated any penalties for non-compliance.

The guidelines come at a time when cryptocurrency continues to gain traction with investors worldwide, including Singapore, which remains an important blockchain hub to many firms.

In December 2021, Britain's advertising watchdog banned crypto ads by seven companies after finding that the companies were “irresponsibly taking advantage of consumers’ inexperience and for failing to illustrate the risk of the investment”.

In Singapore, the peak daily trading volume of crypto assets against the Singapore dollar was less than 1 per cent of the average daily turnover on the Singapore Exchange from January to November 2021. 

But market watchers have noted how the growth of blockchain and cryptocurrencies has sparked heightened interest from retail investors.

Cryptocurrency saw significant regulatory milestones in Singapore last year.

MAS granted four licences to provide DPT services out of a pool of 180 applications.

The anointed quartet are Singapore-based fintech firm Fomo Pay, cryptocurrency payments provider TripleA, Australian cryptocurrency exchange Independent Reserve, and DBS Bank’s brokerage arm DBS Vickers.

Independent Reserve Singapore, which provides digital asset exchange and over-the-counter trading services to people and institutions here, launched an extensive marketing campaign after getting its licence in October 2021.
 
The firm’s crypto ads were plastered on screens in several locations, including Raffles Place and on a fleet of Grab cars. 

Mr Raks Sondhi, the managing director of Independent Reserve Singapore, told The Straits Times on Monday: “We will revisit our retail marketing campaigns to bring them in line with the new MAS guidelines.”

A spokesman for crypto-exchange platform Luno, which has applied for a DPT licence, said it is reviewing the new guidelines.

In a statement on Monday, MAS said it has observed that some DPT service providers have been actively promoting their services through online and physical advertisements or by providing ATMs in public areas. This could encourage consumers to trade cryptocurrencies on impulse without fully understanding the risks.

One risk is that cryptocurrency prices are prone to sharp speculative swings, MAS said.

Ms Loo Siew Yee, assistant managing director for policy, payments and financial crime at 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."

DPT service providers include payment institutions, banks and other financial institutions, as well as applicants under the Payment Services Act (PS Act).