- Singapore cracked down on crypto providers, saying they can't advertise or market services publicly.
- Crypto ATM operators were forced to go offline as a result.
- Crypto ATMs remain unregulated in Hong Kong, marking a divergence in the cities' regulatory approaches.
Cryptocurrency ATMs in Singapore ground to an unexpected halt this week, catching the industry by surprise and leaving rival crypto hub Hong Kong in the lead with more than 100 machines in operation.
Singapore's financial regulator, the Monetary Authority of Singapore (MAS), stated on Monday that crypto service providers should not market or advertise such services publicly, including the provision of physical ATMs. Providers are still able to market their services on their own websites and platforms.
MAS' crackdown caught the industry by surprise. Daenerys & Co., the largest provider of crypto ATMs with five terminals in the city, scrambled to suspend operations.
"We're still in a 'shock' kind of mood," a Daenerys spokesperson told Insider.
"A consultation process with the industry would probably have brought out better outcomes," said Chia Hock Lai, co-chairman of the Blockchain Association Singapore.
Crypto ATMs, also called bitcoin ATMs, allow users to buy and sell cryptocurrencies with cash. They are mostly geared towards the general public and are visible representations of an economy's appetite for cryptocurrencies.
Experts told Insider that while ATMs cater to a specific, mostly small, retail segment of users, they are strong signals on how open an economy is to cryptocurrencies.
With prices of cryptocurrencies hitting record highs in 2021, the number of crypto ATMs around the world exploded. There are almost 35,000 terminals worldwide as of this month, data from Coin ATM Radar show, up from 14,033 terminals in January 2021. The US leads the count with a share of 88%. Canada is a far second at 6.2%.
Asia accounts for a small share of the global count with 240 terminals. Hong Kong has the most in the region with about 130.
Hong Kong and Singapore diverge on crypto ATMs
These latest guidelines are a nudge by Singapore's regulator to shape the country's fledging cryptocurrency ecosystem.
They also outline how Singapore and Hong Kong — both held as friendly economies to cryptocurrencies — are differing in their approaches.
Some of the world's largest crypto derivatives companies are based in Hong Kong, while Singapore is one of the more open Asian markets for crypto-specific regulations, though it is strict on compliance and controls, according to data provider Messari in a report published early 2021.
"For Hong Kong and Singapore, the trend has been to rely on existing regimes" to regulate a limited range of cryptocurrencies, said Stephen Chan, a partner and litigator at Reed Smith in Hong Kong, adding that this overall trend is likely to continue.
Experts said crypto ATMs are unregulated in Hong Kong, while Singapore's latest guidelines denote a clear attempt at drawing regulatory boundaries.
In its guidance, MAS said trading in cryptocurrencies "is highly risky and not suitable for the general public". Advertising or marketing crypto services in public, or the provision of ATMs could entice customers to trade cryptocurrencies on impulse, without fully appreciating the risks that come with it.
"Shutting down bitcoin ATMs is purely done to send a message to the community that their activity is not welcome," said Leonhard Weese, cofounder of the Bitcoin Association of Hong Kong.
It's still business as usual for the many crypto service providers in Singapore.
MAS' guidelines are targeted at a small segment of the community, and "the crypto and blockchain industry is way more multifaceted and vastly expands beyond that," said Katherine Ng, the Asia-Pacific head of marketing and operations at TZ APAC, an Asia-focused adoption entity for the Tezos blockchain ecosystem.
Got a tip? Contact the reporter, Weilun Soon, on wsoon@businessinsider.com.