How will the MAS new guidelines on DPT advertising affect the crypto space?
Singapore has always been dubbed as a “positive friendly economy” with the legislation currently being ranked 1st as the country with the freest economy according to the Heritage Index of Economic Freedom. This obviously comes partially with the success of the Monetary Authority of Singapore in balancing innovation while still maintaining strict regulations but its recent Guidelines on the advertising by Digital Payment Token has drawn a lot of criticism from the crypto space so what are the new guidelines set by the MAS all about? And what are the possible implications it could pose on crypto space?
What are the new guidelines released by the Monetary Authority of Singapore?
Singapore has always taken a balanced approach in terms of Crypto as with its ambitions of being not only the business hub but a global cryptocurrency hub for the world. Singapore being the fifth largest economy in the world has a major influence on the global world especially in terms of its regulations and its move to regulate cryptocurrency instead of outright banning it was still appreciated by the crypto space.
The regulations for cryptocurrency within the country are drawn up by the Monetary Authority of Singapore and currently, most of the regulations for cryptocurrency or Digital Payment Token (DPT) fall under the Payment and Services Act (PSA) 2019. However, given that cryptocurrencies have a wide range of attributes and functions, some of them could fall within the purview of the Securities and Futures Act (Cap.289) (“SFA”) if their characteristics resemble those of capital market products or securities.
Regulating Cryptocurrencies is a big task for a country known to the world as the “wealth hub” and Singapore is clearly raising its safeguards in the crypto regulation with the recent guidelines in order to maintain the integration of cryptocurrency and blockchain into the economy in a safe manner. The Guidelines apply to banks and financial institutions, and other entities providing DPT services in Singapore that have either been granted a license under the Payment Services Act (PSA) or that are currently operating under transitional exemptions under the PSA (collectively, DPT service providers).
The guidelines which became effective immediately after the announcement emphasize on the point that MAS has consistently warned that trading of DPTs is highly risky and DPT Service Providers should provide a basic understanding that these tradings are not suitable for the general public of Singapore. Here are some of the prohibitions and restrictions laid out by the guidelines:
A. Promotion of DPT services to the general public
DPT Service Providers should not market or advertise (eg. display promotional banners) in public including:
- Public transport vehicles;
- Public transport venues,
- Third-party websites;
- Social media platforms;
- Public events or roadshows; and
- Print media (including newspapers and magazines).
MAS has also stated that third parties such as social media influencers and third party websites should not be engaged to market DPT Services and that DPT Service Providers should only promote their DPT services on their own:
- Corporate website(s);
- mobile application(s); and
- official social media account(s).
B. Provision of DPT services in public areas
Additionally, the MAS has stated that the provision of physical automated teller machines (“ATMs”) in public areas would constitute promotion of DPT services to the public and DPT Service Providers should not provide such ATMs.
C. Provision of services relating to DPT-related products
The Guidelines also provide that payment token derivatives (“PTD”) which are derivatives contracts in which DPTs are the PTD’s underlying assets should not be promoted to the public. This includes contracts-for-differences and futures contracts. The MAS states that the general public should not be misled that PTDs are “less risky” than DPTs.
D. Compliance with the Guidelines
Notwithstanding that there has been no mention of any penalties for non-compliance of the Guidelines, DPT Service Providers should definitely heed and comply fully (in substance and in spirit) with the Guidelines so as to ensure reasonable protection of members of the public.
It is to be noted that a leading DPT Service Provider and payment institution licence holder, who had launched an extensive marketing campaign after obtaining the payment institution licence in October 2021 will have their marketing campaigns “revisited” to “bring them in line” with the current Guidelines.
The guidelines obviously are still subject to changes as MAS gathers the various responses from the stakeholders in the crypto space but let’s explore the implications this could have on the future of DPTs in Singapore.
Possible Implications
With every guideline and regulation, there are always implications that are left within the space and eventually in the market. Singapore has always been heavily dependent on foreign investments to help create jobs and encourage investment but foreign countries stay in Singapore because it is trusted for its effectiveness in the legislation and the government. As we all know cryptocurrencies have a huge attraction to bring in not only people but investments towards pro-cryptocurrency countries like El Salvador so these new guidelines could be high stakes for Singapore. It could project the idea to the world out there that Singapore is ready to embrace cryptocurrencies without staking the security of its users or it could literally drive investments away for being too restrictive.
In terms of the guidelines, it is obviously set up with a good thought in mind which DPT service providers should not only market their products and the crazy speculative profits but instead, should seek to educate the concept and the risks they are about to undertake for investing in DPTs. This will in turn lead to an increase in the number of educated investors which is good for the space that is mostly filled with speculation and misinformation. The decrease in speculation should in turn, for the long run, be able to stabilize the market from volatility, nourishing more investors than traders.
It also has the capability to wipe out what we call memecoins which clearly do not have fundamentals and are heavily dependent on external influencers or hype to pump the price. After all an asset should grow because it provides value to a lot people and definitely not because some famous people advertise it.
Well, although guidelines were meant for a good use, a lot of the stakeholders also feel that crypto is being treated differently from traditional finance advertising like the point where ATMs are considered a tool for public promotion. Obviously for all of this, every company in the world needs advertising whether it is a DPT service provider or not but transparency should be the key in their advertising. A DPT Service Provider should not only highlight the hope of getting the next ‘Bitcoin’ and their crazy profits but it should also provide the sufficient information on the risk(s) they will have to face in getting there. Only time will tell what the response is from the stakeholders in the space and if there are any changes deemed necessary to the guidelines.
Nagaya Technologies Pte. Ltd will be looking to integrate it to the future marketing campaign of the world’s first hybrid crypto asset called Nagaya and believe that with these guidelines, Nagaya is well placed to revolutionize crypto space in a secure way for the general public. For more information regarding on the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.io
Or you can talk to us at t.me/nagayaofficial
