Singapore sets "pragmatic guardrails" on crypto advertising to the public

The Monetary Authority of Singapore (MAS) has issued guidelines on the provision of Digital Payment Token (DPT, essentially cryptocurrency) services to the public (the Guidelines). Under the Guidelines, entities providing DPT services should not to promote (i.e. market or advertise) their DPT services in public areas in Singapore, or through any other media directed at the general public in Singapore. The rationale for the move is that trading of such assets is considered “highly risky and not suitable for the general public”. While MAS guidelines are technically not legally binding, Singapore regulated financial institutions are expected to comply and the MAS will take into account any non-compliance in their supervision of entities.

The scope of the restrictions

The Guidelines apply to DPT service providers licensed under the Payment Services Act 2019 (PS Act), banks and financial institutions providing DPT services in Singapore, and DPT service providers currently operating under the transitional exemption under the PS Act (including those who have applied for a DPT service licence and whose applications have not been withdrawn or rejected by the MAS).

The restriction under the Guidelines includes the placing of any form of physical advertisements or promotional materials in public areas in Singapore – such as public transport, public transport venues, broadcast media or periodical publications (including any newspaper and magazine), public events or roadshows, and provision of physical crypto ATMs.

The restriction also applies to advertising through third parties, such as social media influencers or third-party websites. However, DPT service providers can still continue to market or advertise on their own corporate websites, mobile applications or official social media accounts – provided they do not trivialise the risks of trading in DPTs in a manner that is inconsistent with or contradicts the risk disclosure requirements under the PS Act.

DPT service providers are also prohibited from promoting payment token derivatives (PTDs, i.e. derivatives with cryptocurrency as the underlying asset) to the public as a convenient unregulated alternative to trading in DPTs, or misleading the public that PTDs are less risky than DPTs. Instead, licensees must take steps to ensure customers do not confuse any PTD services as being regulated by MAS – e.g. the MAS requires PTD services to be offered through a legal entity which is not licensed under the PS Act.

Focus on investor protection

Singapore has one of the most established crypto regulatory frameworks in the world. These Guidelines have been issued as the popularity of crypto trading is increasing – which can be attributed in part to an increase in crypto advertising, celebrity endorsement, and the promise of high returns. 

The Guidelines demonstrate that consumer protection remains at the forefront of the MAS’ agenda, as retail investors are generally expected to possess more limited knowledge on the nature and risk of crypto products.

Global trends

The Guidelines were issued as several other jurisdictions made similar announcements on the regulation of crypto advertising. In the same week, Spain announced it was implementing new guidelines requiring advertisers to inform its securities regulator of any intention to promote crypto ads or marketing campaigns with the potential to target more than 100,000 consumers. The UK has also just confirmed that rules on financial promotions will be extended to apply to a wide array of cryptoasset services (read more).

What’s happening next

The MAS has announced that it will consider an entity’s compliance with the Guidelines when processing licence applications under the PS Act.

The Singapore cryptocurrency industry has also requested further guidance on the application and scope of the Guidelines, raising concerns around the stifling of innovation and the curbing of growth in the local market. The Guidelines may need to be fine-tuned if they are to strike a balance between the protection of retail investors and Singapore’s continued attractiveness as a fintech ‘hub’.