Singapore's Status as Web3 Paradise Faces New Test
Singapore, a financial center known as the "Asian Web3 Paradise", has been the preferred destination for global crypto asset service providers and Web3 entrepreneurs for many years with its zero capital gains tax and sound legal system. In October 2024, the Monetary Authority of Singapore (MAS) released a detailed draft for soliciting opinions on new regulations for digital token services, foreshadowing a tightening of regulatory policies; and the new regulations response document released by MAS on May 30, 2025 has sparked heated discussions in the crypto industry about whether it needs to "evacuate" Singapore. So what will happen to crypto asset service providers operating in Singapore, especially those that provide services to overseas customers?
Core of the new regulations: supervision is upgraded again
As early as 2022, Singapore passed the Financial Services and Markets Act, Chapter 9 of which specifically established a regulatory framework for digital token services (DTS). This framework involves various virtual assets and crypto asset businesses, such as:
However, the Financial Services and Markets Act at that time did not strictly restrict Singapore-registered entities from providing services to overseas users. Coupled with tax incentives, a large number of web3 projects landed in Singapore, radiating services to the world. In October 2024, the regulatory framework was further refined, and MAS clearly stated in the draft for comments: Entities registered in Singapore need a DTSP license even if they provide encryption services to overseas customers. With the response to the solicitation of opinions issued by MAS in May 2025, a more specific timetable has also been released:The new regulatory scheme will be officially implemented on June 30, 2025. MAS's intention is clear: the days of wild growth are over. If you want to stay and play, you have to abide by the rules.
Why does Singapore do this?
You may ask: Hasn't Singapore always been very friendly to the crypto industry? Why did it suddenly change its face? In fact, this is not a "face change", but a continuation of Singapore's consistent pragmatic style. As one of the earliest jurisdictions to regulate the crypto industry, Singapore's style is to avoid a "one-size-fits-all" strategy, give the industry a certain amount of space, pay close attention to supervision, and develop together with the industry, constantly exploring the upgrade and iteration of regulatory policies and methods.
In the past few years, Singapore's loose policies have successfully attracted a large number of crypto projects, but they have also brought side effects:
1. License abuse:The DTSP license is a pass for compliance, but some institutions use it to play "edge ball", and some project parties use the license to package themselves, attract investment or cover up non-compliant operations.
2. Telecom fraud:Telemarketing fraud has always been a cancer in the crypto industry. Some criminals use Singapore as a base to promote "high-return" crypto products by phone or social media, or induce customers to buy unknown tokens, promote false "custody services", and then run away with the money.
3. Gray and black industries and crime breeding:Some unlicensed crypto asset trading platforms provide customers with "anonymous" services, and criminals take the opportunity to conduct money laundering and terrorist financing activities; other crypto projects disguise funds from unknown sources as legal income, seriously disrupting the financial order.
These chaos not only disrupt the normal development of the crypto industry, but also damage the reputation of the industry and even Singapore; when MAS updated the "National Counter-Terrorism Financing Strategy" in 2024, it also raised the terrorist financing risk level of DTS service providers from "medium-low" to "medium-high". MAS has realized the necessity of tightening regulatory policies from various phenomena. At this point, the goals of the new regulations are very clear: 1. Eliminate "small and scattered": Increase compliance costs and force "small platforms" that are easily abused by illegal activities to exit; 2. Keep "big players": Encourage institutions with strong funds, strong compliance capabilities, and the ability to provide users with safe and stable services to stay; 3. Drain traditional funds: Allow traditional financial institutions and users such as banks and funds to enter the web3 field with more confidence.
In other words, Singapore does not want to drive away the crypto industry, but wants it to develop sustainably rather than being a "safe haven" for criminals.
How big is the impact on the industry's main body?
If you are a crypto asset service provider, the impact of the new regulations depends on your business model. Specifically, there are several situations:
Situation 1: Unlicensed institutions work locally in Singapore and serve overseas customers
For example, a registered entity is established in Singapore and employees are hired to provide crypto asset exchange services to overseas customers. After the new regulations come into effect, you must quickly apply for MAS's DTSP license, otherwise your business will have to be suspended.
Situation 2: An individual is in Singapore and works remotely to provide services to overseas customers
If you are a "digital nomad", working remotely and only serving overseas customers, the situation is slightly more complicated.
1. If the contract is signed with an overseas registered entity, MAS’s current position is that if an individual is an employee of a foreign registered company that provides services outside Singapore, the work performed by the individual as part of his/her employment with the foreign registered company will not trigger the licensing requirement.
2. If it is only in an individual capacity (such as KOL, project consultant, etc.), MAS’s current position is that if an individual is located in Singapore and is engaged in the business of providing digital token services to persons outside Singapore (i.e. individuals and non-individuals), the individual needs to apply for a license.
*It should be noted that MAS’s regulations for such scenarios are relatively broad, and different cases may have different identification results.
Scenario 3: The entity is registered in Singapore, but the actual operation is overseas
If it is just a "company shell" in Singapore, but the actual business and service objects are all overseas, the new regulations may not have much impact.
However, the risk cannot be completely ruled out: MAS may trace the actual place of operation. If it is found that there are substantial business activities in Singapore (such as physical offices or servers), the DTSP license must still be held.
Scenario 4: Providing services to local customers in Singapore
This scenario needs no elaboration. No matter how the new regulations change, those who provide crypto asset services to Singapore residents have long been required to obtain a license. The new regulations only further close the loopholes in cross-border services.
ComplianceSuggestions: ThreeSteps to Steady Your Position
Faced with the new regulations that are about to take effect, web3 institutions and practitioners must grasp the key and take action. Here are three practical suggestions to help you cope with the changes: 1. Understand the business clearly First, find out which category your business model belongs to and whether you need a license. 2. Prepare for the license application in advance If you decide to stay in Singapore, prepare for the MAS DTS license application as soon as possible.
3. Consider migration options
If the compliance costs are too high, look elsewhere, such as other Asian countries or even Europe or the Middle East.
Opportunities and challenges coexist, don't be scared away by new regulations
Singapore's new crypto regulatory rules seem to have put a "tight ring" on the industry, but from another perspective, this is also an opportunity. For large institutions with sufficient strength and budget, compliance may be the only way to attract more funds into the crypto market; for relatively small institutions and teams, timely adjustment of strategies and accurate positioning can also help them find opportunities for compliance transformation.
YouQuan
Aaron
Hui Xin
Clement
Davin