Singapore to deter crypto investors with tactics like those used on smokers, gamblers

Buying on credit forbidden, affordability tests imposed, and accreditation required for big bets

The Monetary Authority of Singapore (MAS) revealed on Thursday its latest cryptocurrency regulations – measures designed to manage the digital payment tokens (DPTs) with measures akin to those some governments treat cigarettes or gambling.

"DPT service providers have the obligation to safeguard the interests of consumers who interact with their platforms and use their services,” explained MAS deputy managing director Ho Hern Shin.

Under the controls – which go into effect in phases from mid-2024 – DPT service providers will be required to identify, mitigate, and disclose conflicts of interest. They also must publish governing policies and procedures to resolve disputes.

The crypto slingers are also expected to assess a customer's risk awareness to access DPT services.

And they are barred from providing incentives to trade them.

Use of credit cards to buy DPTs, or providing finance to assist purchases, is also prohibited. The value of cryptocurrency held must be limited to a value based on a customer's net worth.

"Regarding credit card and charge card payments, MAS will not allow [DPT service providers] to accept credit card or charge card payments, except from foreign-issued credit cards or charge cards," detailed MAS in a document [PDF] released Thursday.

"While MAS recognizes that credit card payments are seen as a convenient means of payment, MAS is of the view that credit card and charge card usage would allow retail customers easy access to debt financing, running counter to MAS's policy intent to restrict purchases of cryptocurrencies on credit."

Exemptions from the rules are available for those deemed to be "accredited investors." To receive such status, an individual must have a minimum of $1.49 million (SG$2 million) in net personal assets. Crypto assets can play a part in the portfolio, but only up to $149,000 (SG$200,000) or 50 percent of their crypto holdings – whichever is lower.

The measures are the regulator's second effort to protect customers from cryptocurrency and deter investments. In October 2022, MAS released its first set of rules that required retail investors to take risk tests before trading, DPT trading platforms to provide relevant risk disclosures, and segregation of customer assets from those of their service providers.

At that time, MAS called DPTs "highly risky and not suitable for the general public."

Public advertisements promoting cryptocurrency were banned in Singapore in January 2022.

The rules for crypto investors are not out of the ordinary for Singapore.

Singapore politicians have claimed that the country was "a world pioneer in tobacco control" – much like its efforts to regulate the crypto industry.

Tobacco advertisements have been banned in Singapore since 1971, with giveaways like free samples and other promos illegal since 1989. The country also requires consumer warnings displayed on the packaging, warning against the inherent danger of the vice. All measures that have parallels in the proposed crypto regulations.

Tobacco manufacturers have in turn called Singapore the "world's most hostile environment" for the industry.

Similarly, gambling is highly regulated in the city-state. Online gambling is illegal, but a state-owned lottery company – Singapore Pools – and tourism-targeted casinos do exist. As does a singular horse racing club, though it is slated for closure next October.

The casino at flagship resort Marina Bay Sands requires Singaporean citizens and permanent residents to pay entry fees not required of foreigners.

Singapore also has programs to ensure that its citizens don't get too comfortable inside casinos. Families can apply for their relatives to be barred. Individuals may also receive a "third-party visit limit" that involves receiving a letter from a government organization to conduct an assessment of the gambler's financial situation that potentially ends in banishment from gambling establishments.

All which gives some indication to where Singapore's crypto regulations could be headed.

While the city-state is generally anti-crypto, it does promote the development of CBDCs and stablecoins. This month it issued in-principle approval for three entities to issue stablecoins. ®

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