Jessy, Golden Finance
Has Singapore changed?
On June 30, 2025, the Monetary Authority of Singapore (MAS) will officially implement the new regulations for digital token service providers (DTSP). The bill clearly stipulates that institutions and individuals that provide digital token services defined by the FSM Act in Singapore need to be licensed, otherwise they will be involved in illegal activities.
The issuance of this document seems to indicate a change in the Singapore government's attitude towards Web3. In the early years, the Singapore government actively embraced Web3. After the FTX crash and Luna collapse, it began to emphasize finding a balance between innovation and risk control, and classified the crypto industry through the formulation of regulations and the issuance of guidelines. At this stage, supervision began to tighten, and some crypto companies began to move from Singapore to Hong Kong or Dubai, where supervision was more relaxed. On June 30, the implementation of the new regulations seemed to have ushered in an era of stricter supervision.
And the sky did not change suddenly, just like the implementation of the licensing guidelines did not come out of thin air. Since 2020, MAS has passed the Payment Services Act to bring digital payment tokens under regulation, requiring local companies that provide services such as crypto exchange to apply for licenses. Since then, MAS has realized that there is still room for regulatory arbitrage: some crypto companies set up bases in Singapore but only serve overseas customers to evade local licensing requirements. In order to plug this loophole and meet the standards of the Financial Action Task Force (FATF), the Financial Services and Markets Act was passed in April 2022, of which Part 9 specifically introduced a digital token service provider, i.e., a licensing system. After the law was passed, MAS did not immediately strictly enforce it. In April 2023, MAS passed an amendment to the Financial Services and Markets Act, requiring all Singapore-registered companies (regardless of whether the service objects are in Singapore) to apply for a DTSP license, which ended the exemption period of "no need to hold a license to serve overseas customers".
The formal implementation of the "Digital Token Service Provider Licensing Guidelines" is just that the regulatory hammer has finally been hammered down, and the big institutions have stayed.
Whether individuals or institutions, they need to be licensed
The Monetary Authority of Singapore (MAS) clearly stipulates that the new DTSP regulations will be officially implemented from June 30, 2025, without any buffer period. All unlicensed digital token service providers must stop providing services to overseas customers before this date, otherwise they will be considered illegal and may face fines, revocation of registration or even criminal liability. This move shows Singapore's determination to regulate the field of digital token services and leave no room for illegal operations.
The application conditions for the license are extremely strict. The new regulations stipulate that the licensed entity must be a company registered in Singapore or have an entity operation, and must have a clear overseas business structure and customer compliance process. In terms of capital requirements, the minimum paid-in capital is 250,000 Singapore dollars, and those involving complex businesses such as custody, leverage, and derivatives will be raised to higher tiered capital requirements. In addition, licensed institutions are required to pay an annual fee of S$10,000, and the controller (director, CEO) must have an appropriate financial background and a good credit record, and the person in office must be a Singaporean. MAS emphasized that it will approve the DTSP license in an "extremely cautious" manner, and will only approve applications in "extremely limited circumstances", which means that only a few companies that meet high standards can be approved.
The DTSP license covers almost all services in the digital token industry chain, from issuance, trading, transfer, to custody, operation, etc., which are all under supervision. Specifically, it includes digital token exchange services, transfer services, underwriting or promotion services for issuing tokens, custody or management of tokens, transaction matching platforms, token derivatives and contract product design and trading services, etc. In addition, independent developers, KOLs, and consultants who provide "token-related advice" also need to apply for a license. The new regulations also stipulate that even if all the company's users are abroad, as long as the operating entity is registered in Singapore, it must apply for the license. And without a license, neither individuals nor companies can conduct business for local or overseas customers in Singapore at any business location in Singapore.
The most noteworthy thing about the new regulations is the full coverage of the regulatory scope. Whether it is a company or an individual, as long as they provide digital token services, they need to be regulated. Only employees of overseas companies are allowed to work from home.
After the FTX crash, the gradual escalation of supervision
This time, Singapore has greatly increased the supervision of digital token services, which is not a sudden policy shift. First of all, as early as 2020, MAS passed the "Payment Services Act" to include digital payment tokens in the supervision, and local companies that provide services such as crypto exchange need to apply for licenses.
However, the clear tightening of supervision did start at the end of 2022, when FTX and Luna crashed, and the currency circle entered its darkest moment.
After the FTX crash, a large number of investors, including Singapore's sovereign fund Temasek, faced huge losses. Starting from 2023, intensive supervision will be introduced, involving the licensing requirements for institutions and all aspects of retail investor protection.
In April 2023, MAS passed an amendment to the Financial Services and Markets Act, requiring all Singapore-registered companies (regardless of whether the service objects are in Singapore) to apply for a DTSP license, which ended the exemption period of "no license required for serving overseas customers".
In July 2023, the Monetary Authority of Singapore (MAS) issued a draft amendment to the Payment Services Regulations, requiring all DPT service providers (such as exchanges and custodians) to deposit customer assets in a statutory trust, prohibiting the misappropriation of customer funds, and restricting the provision of token lending and staking services to retail users to prevent asset mixing risks similar to FTX.
In October 2023, MAS also proposed to prohibit retail investors from purchasing cryptocurrencies with credit cards and leverage.
The core of these policies is to strictly isolate risks and strengthen the protection of retail investors. These intensive policies indicate that Singapore is shifting from a "crypto-friendly safe haven" to a "high compliance threshold innovation center". It was also in this year that many unlicensed exchanges withdrew from Singapore actively or passively at the end of the transition period at the end of 2023. For example, Binance, Bybit, and Huobi all suspended local services for Singapore users this year.
The new DTSP regulations, which will officially come into effect on June 30, are more stringent than the amendment to the Financial Services and Markets Act passed by MAS in April 2023. The 2023 FSMA amendment mainly addresses the issue of regulatory jurisdiction, forcing all Singapore-related companies (including those serving overseas customers) to be included in the scope of licenses to plug offshore loopholes; the 2025 DTSP new rules set up high barriers to entry and strict continuous compliance requirements, such as implementing a tiered capital system (minimum 500,000 Singapore dollars, maximum 2 million Singapore dollars), which is 5-20 times higher than the previous non-rigid standards; 90% of customer assets are required to be stored in cold storage, on-chain transactions are monitored in real time, and major events are reported within 1 hour; unlicensed operations can be sentenced to up to 7 years in prison + a million-dollar fine, and the mixing of customer assets is a criminal offense.
This new regulation clarifies "how to regulate and how harshly to regulate", and the purpose of this new regulation itself is to push Singapore's Web3 into a high compliance cost era where "only giants can play" by screening out 99% of small and medium-sized institutions.
This is indeed the case. At present, there are 33 known licensed companies (including those holding digital currency payment licenses), including Anchorage Digital Singapore, BitGo Singapore, Blockchain.com (Singapore), Bsquared Technology, Circle Internet Singapore, Coinbase Singapore, DBS Vickers Securities (Singapore), OKX, Paxos, Ripple, HashKey and GSR. All of these institutions are giants in the crypto industry, or have a deep traditional financial background.
Real losses, damage to national reputation, and pressure from international supervision
Behind such harshness is actually the consistent style of Singapore, a country that is rigorous and law-abiding. If it is said that Singapore actively embraced Web3 at the beginning, it attracted a large number of industry institutions to settle in, as well as the immigration of industry leaders. Then the gradual tightening of subsequent supervision is actually a process of discovering problems that continue to emerge in the process of accepting Web3, and then gradually formulating laws and regulations for supervision. In the process of experimentation and innovation, Singapore discovered that "the problem of cryptocurrency seems to be a bit big." MAS Director-General Meng Wenlong emphasized at the February 2023 Financial Stability Assessment conference that "Singapore's approach to the crypto industry is quality over quantity. We have no intention of becoming a 'loose' hub for cryptocurrency activities, but are committed to developing an ecosystem of trusted and responsible participants, focusing on risk management and compliance." In the consultation document on the new DTSP regulations for 2025, MAS clearly wrote: "Due to the Internet-based and cross-border nature of digital token services, digital token service providers (DTSPs) are more vulnerable to money laundering/terrorist financing (ML/TF) risks... The main risk posed by DTSPs to Singapore will be reputational risk, that is, if they are involved in or abused for illegal purposes, it may damage Singapore's reputation." It can be said that the collapse of FTX is the biggest driving force for Singapore to clarify strict supervision. At that time, Singapore's sovereign fund Temasek lost $275 million due to its investment in FTX. The then Deputy Prime Minister Lawrence Wong (now the Prime Minister) publicly admitted that the incident caused "national reputation damage", and Temasek therefore cut the salaries of senior executives of the investment team.
In August 2023, Singapore cracked the largest money laundering case in history, involving 3 billion Singapore dollars. The case used cryptocurrencies and shell companies to launder money. Its assets were spread across 7 countries around the world, including 15 luxury homes in Singapore and hundreds of millions of Singapore dollars in deposits.
At the same time, Singapore is also facing international regulatory pressure. The international anti-money laundering organization FATF released the "Singapore Anti-Money Laundering/Counter-Terrorist Financing Measures Mutual Evaluation Report" in October 2023, which clearly pointed out: "Singapore has gaps in the supervision of cross-border activities of virtual asset service providers (VASPs), especially offshore entities serving overseas customers are not fully included in the jurisdiction." The report warned that if Singapore does not fill the loopholes, it may trigger FATF's "enhanced follow-up procedures" (i.e., the pre-grey list warning mechanism).
Faced with real losses, damage to the country's reputation, and pressure from international supervision and public opinion, Singapore has to implement strict supervision on Web3. The change in Singapore is just a mirror image of the gradual clarification of global crypto regulation. In fact, international crypto regulation is moving towards a situation of comprehensive tightening, strengthening compliance and strengthening international cooperation. All countries are actively adjusting their regulatory strategies according to their own conditions to cope with the risks and challenges brought by the crypto market.
Compliance is the main theme of future crypto development, and powerful large institutions are the main players on the crypto table in the future. There are not many opportunities left for small and grassroots entrepreneurs.
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