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Singapore Hits the Brakes on Crypto Ads at F1 Grand Prix

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Crypto.com has paid millions to sponsor Formula One. When the event comes to Singapore later this month, that could mean a lot of empty space.

The company has been part of a drive by cryptocurrency firms to plaster their logos across F1, a high-octane sport whose audience has grown in recent years. Crypto mogul Sam Bankman-Fried’s FTX Trading Ltd. has a deal with

Mercedes,

Binance has signed on with Alpine, and Bybit has teamed up with Red Bull.

But Crypto.com appears to have taken pole position. The Singapore-headquartered company is a sponsor of

Aston Martin,

the title sponsor of the new Miami Grand Prix and a global partner of F1.

That spending spree will not mean as much when F1 comes to Crypto.com’s hometown. The Singapore Grand Prix is returning over the Sep. 30 weekend after a two-year pandemic-related break. Although Singapore has become a popular destination for crypto and blockchain firms, wild price swings and a series of brutal selloffs over the past year have made the city’s financial regulator increasingly skeptical. In January, it clamped down on the advertising of crypto services to the general public.

At the F1 Grand Prix, that ban won’t apply to cars or to drivers’ uniforms but it will apply to advertising around the venue. That means the blue and white Crypto.com ads typically lining the track as cars whiz past will not be visible in Singapore.

The city’s rationale for the distinction is that the teams’ equipment is used around the world and logos on it are seen as advertising to F1 fans globally, while branding on the track itself is more directly aimed at locals, and so in breach of the rules.

Preparations are on for the return of the Singapore Grand Prix, after Covid-19 cancellations in 2020 and 2021.



Photo:

Lionel Ng/SOPA Images/Zuma Press

While a single race represents just a fraction of Crypto.com’s sponsorship costs—the company paid $700 million to rename the arena formerly known as the Staples Center in Los Angeles and $100 million to sponsor the new F1 Sprint races—the ban shows the uncertainties around heavy ad spending for an industry facing increasing regulatory pressure.

The current guideline is the same as that given in March by the Monetary Authority of Singapore, the city-state’s central bank and financial regulator, said Chia Hock Lai, co-chairman of Blockchain Association Singapore. But the March clarification came before the worst of a widespread crypto rout that included the implosion of sister tokens TerraUSD and Luna and the collapse of crypto hedge fund Three Arrows Capital, which both had links to Singapore.

Ravi Menon,

managing director of the MAS, has since used more aggressive language about cryptocurrencies, calling them “highly hazardous.”

That led to uncertainty among F1 teams and their crypto sponsors, which range from some of the world’s largest exchanges to a meme coin named after Elon Musk’s dog. The MAS hasn’t made a public statement on how the ban applies to the race—although it did tell the F1’s organizers—and with just weeks to go, some teams don’t seem sure about the rules.

France has also adopted advertising restrictions on crypto firms, but while some F1 teams removed their crypto sponsors’ logos for the French Grand Prix in July, others kept them. Crypto.com said it adjusted its branding at the race after considering local requirements. Its logo vanished from Aston Martin’s cars. The usual spot for Binance’s logo on Alpine’s cars was filled by another brand.

Singapore’s argument for barring crypto logos on the track but not on the equipment is that the former are specifically aimed at locals.



Photo:

Julien Delfosse/Dppi/Zuma Press

The crypto-advertising issues are reminiscent of those that arose when governments and global sports organizations, including F1 itself, imposed restrictions on tobacco marketing. Marlboro was one of F1’s most prominent sponsors for decades, with seven-time world champion Michael Schumacher sporting the American cigarette’s branding on his car and uniform for the Ferrari team.

Over the years, to work around the tobacco ad ban in various countries, F1 teams came up with ways to hide the cigarette sponsors on their cars. The logos were replaced by the drivers’ names and even controversial bar-code designs, or simply left blank. Crypto logos can be similarly altered, since the ads tend to be stickers that can be easily removed.

In Singapore, crypto companies can advertise only to professional investors, and their ads are outlawed in areas such as public transportation, shopping malls, websites, social media or third-party platforms that could target retail customers. The MAS has said it is considering further measures to protect consumers but that it still wants to develop other parts of the digital-asset world including blockchain technology.

Write to Elaine Yu at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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