The Monetary Authority of Singapore (MAS) issued new Guidelines on Provision of Digital Payment Token Services to the Public (Guidelines) in January 2022. The Guidelines reinforce MAS’s previous warnings that trading digital payment tokens (DPTs) such as bitcoin and ether is “highly risky and not suitable for the general public” and state MAS’s expectation that DPT service providers should conduct themselves accordingly. The Guidelines apply to companies licensed to provide DPT services under Singapore’s Payment Services Act (PS Act), applicants for DPT services licences operating under transitional PS Act exemptions and financial institutions that provide DPT services.
Under MAS’s regulatory scheme, the Guidelines are not legally binding but establish best practice standards that persons subject to them are expected to observe. MAS may consider a person’s degree of compliance with the Guidelines when assessing the overall risk of that person in MAS’s licensing and supervisory roles.
The Guidelines set standards of conduct for DPT service providers in three areas:
Promotion of DPT Services to the General Public
The Guidelines instruct DPT service providers not to promote their DPT services in public spaces or through media directed at the general public in Singapore, whether directly or indirectly through social media influencers, third-party websites or other channels. This aspect of the Guidelines has resulted in some DPT service providers promptly revising their local promotional activities.
The Guidelines also forbid DPT service providers from “trivialising” the high risks of DPT trading or promoting their services in a manner that contradicts the risk disclosures they are required to provide under the PS Act.
The Guidelines permit DPT service providers to promote their services on their own websites, apps and social media accounts.
Provision of DPT Services in Public Spaces
The Guidelines prohibit DPT service providers from providing ATMs or similar physical kiosks in public spaces in Singapore as MAS views them as a form of promotion of DPT services to the public.
Provision of Services for DPT-Related Products
The Guidelines bar DPT service providers from promoting payment token derivatives (PTDs) to the public as alternatives to DPTs or as being less risky than DPTs. PTDs are derivatives contracts for which DPTs are the underlying assets. PTDs are currently unregulated in Singapore unless they are offered by an approved securities exchange such as SGX or the Asia Pacific Exchange.
DPT service providers should review their current DPT promotional activities in Singapore to ensure that they comply with the Guidelines.
Disclaimer: This article is for general information only and does not constitute legal advice.