The Monetary Authority of Singapore (MAS) published new guidelines on the provision of digital payment token (DPT) services to the general public on January 17, 2021. MAS considers DPTs, which include cryptocurrencies, to be risky and unsuitable for the general population’s consumption. As a result, the citizens should not be encouraged to trade DPTs, and some may even seek to discourage them from doing so.
Under the Payment Services Act (PS Act), entities that provide services related to cryptocurrencies are regulated mainly for money laundering, terrorism financing risk, and technology risk. Customers of these entities must be informed of the risks of trading in cryptocurrencies under these regulations.
The PS Act is Singapore’s new payment service framework that has been effective since 28th January 2020. It is an activities-based, risk-proportionate regulatory regime that governs payment service providers and designated payment systems.
With the cryptocurrency landscape in Singapore continually changing, MAS will continue to review and update these guidelines as needed.
With this in mind, here are the guidelines cryptocurrency providers should note:
1) No Promotion of Cryptocurrency Services to General Public
Cryptocurrency service providers should not portray cryptocurrencies in a manner that trivialises the high risks of trading in this form of currency, and should not promote their services in public areas in Singapore or through any other media that is specifically directed to the populace.
Advertisements or promotional materials found in MRT stations, public transportation venues, broadcast media, third-party websites, social media platforms, public events, or roadshows are examples of this.
It also includes engaging with influencers or third-party websites to promote their services to the public, such as joint promotional campaigns to canvas new customers.
Cryptocurrency service providers may promote their services through corporate websites, mobile applications, or official social media accounts. However, they should not trivialise the risks associated with trading in cryptocurrencies in a way that is inconsistent with the risk disclosures under the PS Act.
2) Ban on Cryptocurrency Service Promotion in Public Areas
Cryptocurrency service providers shall not use Automated Teller Machines (ATMs) to enable in-person access to cryptocurrency services in public spaces. MAS warns that such convenient access may mislead the public to trade in cryptocurrencies on impulse, without factoring in the risks involved.
3) No Provision of Cryptocurrency-related Products and Services
Last, cryptocurrency service providers should not promote Payment Token Derivatives (PTDs) to the public as convenient unregulated alternatives to trading in cryptocurrencies.
PTDs are derivatives contracts that reference cryptocurrencies as underlying assets. These include contracts-for-difference and futures contracts. MAS does not regulate PTDs unless they are offered by an Approved Exchange under the Securities and Futures Act (SFA).
As such, licensees under the PS Act should ensure that their clients know that the MAS does not regulate these services. It is worth noting that PTD services may only be offered through a legal entity that is not licensed under the PS Act.
RegTank will continue to closely monitor these new guidelines and work closely with firms to keep them updated. Find out more about how our compliance suite can help your organisation remain compliant with the latest guidance and regulations.
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