Is Singapore's tightening of Web3 regulation a "clearance" or an "upgrade"?

In the past few years, Singapore has been one of the most favored "bases" for virtual currencies and Web3 companies around the world. Loose policies, stable legal system, open innovation environment... For a time, various crypto players moved in and regarded Singapore as the "Asian Crypto Capital".

But things change. Today, Singapore is slowly switching from the "encouraging innovation" model of its early years to the steady route of "risk prevention and control". From a policy perspective, some people even think that Singapore is going to "kill all" Web3?

In the eyes of Lawyer Liu, it has only completed its "primitive accumulation" and is now starting to be finely governed.

1. Initial stage: welcome everyone, make the cake bigger first

Singapore was not a "conservative" from the beginning. After the introduction of the Payment Services Act (PSA) in 2019, the legal status of digital payment token (DPT) services was clarified, which provided a clear licensing path for cryptocurrency exchanges and wallet services. In addition, MAS (Monetary Authority of Singapore) has always encouraged technological innovation, and a large number of Web3 projects have begun to land here, including "Project Ubin" and "Project Orchid" and other experimental projects exploring central bank digital currency and tokenized assets.

We can understand that stage as "seizing the first opportunity" - as long as the compliance bottom line is not stepped on, you can boldly try. For many startup teams, this is a rare "window period".

Second, after the explosion: You can’t just focus on making money

However, as the industry expands, some hidden mines have also exploded.

In 2022, Three Arrows Capital (3AC) "exploded" in Singapore, followed by the collapse of FTX, which Temasek invested heavily in, which put Singapore's financial management under great pressure. After all, in the industry where global compliance is the most concerned, if the financial center has problems, it is not a problem of the company, but a problem of national credit.

So, the Singaporean regulators acted quickly. On the one hand, the supervision of crypto service providers was strengthened institutionally, such as the introduction of a stricter Financial Services and Markets Act (FSM); on the other hand, clear restrictions were imposed on retail investors, emphasizing that "you can't speculate in cryptocurrencies like buying lottery tickets".

Third, retail investors: Sorry, Singapore no longer welcomes "gamblers"

The most typical example is the regulatory details released by MAS at the end of 2023, which directly "brakes" retail investors.

The policy clearly requires that cryptocurrency service providers cannot give retail investors any form of rewards, such as cashback, airdrops, and trading subsidies; nor can they provide leverage, credit card deposits, and other functions that magnify risks; they must even assess users' risk tolerance and set investment limits based on net asset value.

In a word, Singapore hopes for rational investors, not "all in BTC" gamblers in the currency circle.

Fourth, service providers: those who are not compliant, please leave directly

By 2025, this trend has become more and more obvious. In the final policy guidelines issued by MAS on May 30, it is stipulated that all companies that have not obtained a digital token service provider (DTSP) license must be "cleared" by June 30, 2025 at the latest if they still want to provide services to overseas customers. There is no transition period and no room for bargaining.

Who can stay? At present, only a few leading companies have been approved, such as Coinbase, Circle, HashKey, OKX SG, etc. There are 24 companies in exemption status, such as Cobo, Matrixport, Antalpha, etc. These companies have either passed strict anti-money laundering and risk reviews, or have a high degree of cooperation and background compliance.

What about the rest? Either switch to other markets or "wash out the money" as soon as possible.

Fifth, the fund circle is also tightened: not only must you have money, but you must also understand money

In addition to retail investors and service providers, Singapore has not let go of fund managers.

In traditional finance, Singapore has always been the fund center in the Asia-Pacific region. Now, incorporating virtual assets into the formal fund management process is their next goal.

MAS stipulates that if you want to set up a cryptocurrency fund in Singapore, even if you only serve "qualified investors", you must have the corresponding qualifications. Hedging risks, identifying customer assets, establishing internal risk control processes, and even anti-money laundering reporting mechanisms are all required.

In other words, the era in which "a few big names in the currency circle + a PPT + a foreign team" could set up a fund is completely over in Singapore.

Written at the end: Is it "suppression" or "evolution"?

Many people looked at this wave of regulatory upgrades and said with emotion: "Singapore is no longer a Web3 paradise." But if you change your perspective, you will find that this is actually the normal evolution of regulation - from "allowing trial and error" to "regulating order", it is the path that any emerging market must take before it matures. Today, Singapore no longer welcomes people who come to "work on projects" with a speculative mentality, but it is still one of the most attractive markets in the world for teams that are truly technical, capable, and have long-term plans.

MAS Vice President Ho Hern Shin said: "We welcome responsible innovation, but we will never tolerate abuse of trust." In other words - if you want to do something big in Web3, Singapore's door is still open. But don't think about coming here to "make a quick buck and leave."

However, there are also views that the development of the currency circle and even the entire web3 industry is still in a relatively primitive stage, and the prototype of the future has not even been fully formed. Putting a tight ring on an industry that has not fully developed too early can only throw out the baby's bath water, and it cannot solve all problems.