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MAS Issues Guidelines to Discourage Cryptocurrency Trading by General Public

27 January 2022

The Monetary Authority of Singapore (MAS) issued guidelines giving effect to MAS’ expectations that Digital Payment Token (DPT or more commonly known as cryptocurrency) service providers should not promote their DPT services to the general public in Singapore.
Digital Payment Token (DPT) service providers include payment institutions, banks and other financial institutions, as well as applicants under the Payment Services Act (PS Act).

Background

MAS regulates the provision of payment services under the Payment Services Act 2019 (“PS Act”). Providers of such payment services are required to hold a license and comply with requirements that are calibrated according to the risks that specific payment services and business models pose including money laundering and terrorist financing (“ML/TF”), loss of money owed to consumers or merchants due to insolvency, fragmentation and limitations to interoperability, and technology and cyber risks.

The potential and increasing risk, is that consumers are being encouraged to purchase such tokens without a full appreciation of the associated risks.  This is exacerbated by the increase in DPT service providers actively promoting their services through online and physical advertisements or through the provision of physical automated teller machines (ATM) in public areas potentially facilitating impulsive purchasing by consumers without a full understanding of the related risks.

Aside from amendments related to anti-money laundering and countering terrorist financing (“AML/CFT”), MAS proposes to introduce powers to impose measures on digital payment token (“DPT”) service providers and make other miscellaneous amendments through the PS Act.

A summary of these changes is set out below:

Key Risk

Guideline

Promotion of DPT services to the general public

 

DPT service providers should not portray the trading of DPTs in a manner that trivializes the high risks of trading in DPTs, and should not promote their DPT services in public areas in Singapore or through any other media directed at the general public in Singapore.

This includes placing of any form of advertisements or promotional materials in public areas such as Singapore public transport, public transport venues, broadcast media or periodical publications, third party websites, social media platforms, public events or roadshows.

Provision of DPT services in public areas

DPT service providers should not provide physical ATMs in public areas in Singapore to facilitate public access to their DPT services as such in-person access to DPT services through automated teller machines (ATM) is promotion.

Provision of services relating to DPT-related products (Payment Token Derivatives (PTD)

Payment token derivatives (“PTDs”) are derivatives contracts that reference DPTs as underlying assets. These include contracts-for-differences and futures contracts.

MAS does not regulate PTDs unless they are offered by an Approved Exchange under the Securities and Futures Act therefore DPT service providers should not promote PTDs to the public as a convenient unregulated alternative to trading in DPTs.

DPT service providers should not mislead the public that PTDs are less risky than DPTs

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