On May 30, 2025, the Monetary Authority of Singapore (MAS) released a response document regarding the new regulations for Digital Token Service Providers (DTSP), and many are still unaware that this will actually affect the landscape of the entire Asian Web3 industry.
The new regulations will officially take effect on June 30, 2025, and MAS has clearly stated that there will be no grace period! A large-scale 'Web3 exodus from Singapore' may have already quietly begun.
'We will be extremely cautious.' When MAS openly expressed this attitude in this harshly worded consultation document, the Singapore that was once hailed as the 'cryptocurrency-friendly paradise of Asia' is saying goodbye to the past in an unexpectedly stringent manner—not through gradual policy adjustments, but through almost 'cliff-like' regulatory tightening.
For those project parties and institutions that are still observing, this may no longer be a question of 'whether to leave,' but rather 'when to leave' and 'where to go.'
The former glory: The golden age of regulatory arbitrage
Do you remember Singapore in 2021? When China completely banned cryptocurrency trading and the US SEC wielded its regulatory stick everywhere, this small island nation opened its arms to welcome Web3 entrepreneurs. Three Arrows Capital, Alameda Research, FTX Asia headquarters... one by one, prominent names chose to settle here, not only because of the 0% capital gains tax but also due to the 'embrace of innovation' stance shown by MAS at that time.
At that time, Singapore was considered a 'regulatory arbitrage paradise' for the Web3 industry. Registering a company here allowed for the legal and compliant provision of digital asset services to global users outside of Singapore while enjoying the reputation boost of being in Singapore's financial center. This 'being in Singapore, but focused on the global' business model once attracted countless Web3 practitioners.
Now, Singapore's new DTSP regulations mean that Singapore has completely shut the door to regulatory friendliness; its stance can be summed up in one sentence: drive all the unlicensed individuals out of Singapore.
What is DTSP? A definition that is 'chilling' upon reflection
DTSP stands for Digital Token Service Provider. According to the definition in section 137 of the FSM Act and the content of document 3.10, DTSP includes two types of entities:
1. Individuals or partnerships operating at business premises in Singapore;
2. Singapore companies conducting digital token services outside Singapore (regardless of whether the company is from Singapore or elsewhere)
This definition seems simple but hides deadly traps.
First, what is MAS's definition of 'business premises'? The definition given by MAS for 'business premises' is 'any location in Singapore used by a licensee to conduct business (including stalls that can move from one location to another).'
Note several key points in this definition:
'Any location': no restriction that it must be a formal business premises
'Including stalls': even mobile stalls are included, showing the broad scope of regulation
'Used for conducting business': the key point is whether business activities are conducted at that location
Simply put, as long as you are unlicensed in Singapore, conducting any business involving digital assets at any location carries a risk of legal violation, whether you are a local Singapore company or an overseas company, and regardless of whether you are targeting local or overseas clients.
So, will working from home be illegal?
In response to this question, Baker McKenzie law firm submitted feedback to MAS in their document.
Baker McKenzie law firm specifically sought clarification from MAS on this issue:
'Given the prevalence of remote work, does MAS's policy intent cover individuals employed by overseas entities but working from home or residential premises in Singapore?'
The concerns of law firms are very real. They have listed several situations that could lead to pitfalls:
Individuals providing DT services for overseas companies from home (possibly in a consulting capacity)
Employees or directors of overseas companies working in Singapore under remote work arrangements
At the same time, law firms are also trying to provide some 'amulets' for those working from home:
'Based on the current legislative drafting, it can be argued that home or residential premises should not be included, as home or residential premises are typically not understood as places where licensees conduct business.'
However, MAS doused cold water on this issue:
'According to section 137(1) of the Financial Services and Markets Act, all individuals engaged in providing digital token services to overseas clients at business premises in Singapore must obtain a DTSP license, unless they belong to a certain category of individuals specified in section 137(5) of the Financial Services and Markets Act. In this regard, if an individual is located in Singapore and provides digital token services to overseas individuals (both natural and non-natural persons), that individual must apply for a license under section 137(1) of the Financial Services and Markets Act. However, if the individual is an employee of a foreign-registered company providing digital token services to overseas clients, the work performed as part of their employment with the foreign-registered company will not trigger the licensing requirements under section 137(1) of the Financial Services and Markets Act.'
And
'However, if these individuals work in shared office spaces or in the offices of associated companies of overseas entities, they would clearly be more easily included in the scope.'
To summarize the new regulations:
Without a license, whether individuals or companies, no one can conduct business targeting local or overseas clients at any business premises in Singapore.
If you are an employee of an overseas company, working from home is acceptable.
However, the new regulations also have many ambiguities:
MAS's definition of employees is very vague; whether project founders count as employees and whether holding shares counts as being an employee is entirely up to MAS.
If you are a BD or sales employee of an overseas company and go to someone else's shared office to discuss business, does that count as conducting business at a business premises? MAS decides.
Ambiguous definition of digital token services, could KOLs also be affected?
MAS's definition of digital token services is shockingly broad, almost covering all related token types and services. Is even the publication of research reports included?
According to the provisions of Schedule 1 (j) of the FSM Act, the regulatory scope includes:
'Any services related to the sale or offer of digital tokens, including: (1) providing advice related to digital tokens directly or through publications, articles, etc. (in electronic, print, or other forms), or (2) providing advice related to digital tokens through publishing or disseminating research analysis or reports (in electronic, print, or other forms)'
This may mean that if you, as a KOL or institution, publish a report analyzing the investment value of a certain token in Singapore, you may theoretically need a DTSP license; otherwise, you could be deemed illegal.
The Blockchain Association of Singapore raised a soul-searching question to MAS regarding this issue:
'Will traditional research reports be considered related to token sales or offers? How should participants distinguish between research reports related to token sales or offers?'
MAS has not provided a clear answer; this ambiguity leaves all content creators walking on thin ice.
Which groups might be affected?
Individual identity type (high risk)
Independent practitioners: including developers, project consultants, market makers, miners, etc.
Content creators and KOLs: including analysts, KOLs, community operators, etc.
Core project personnel: including founders, BDs, sales, and other key business personnel
Institution type (high risk)
Unlicensed exchanges: CEX, DEX
Project party: DeFi, wallets, NFTs, etc.
Conclusion: The end of Singapore's regulatory arbitrage era
A terrifying reality emerges: Singapore is serious this time, aiming to 'drive out' all non-compliant individuals from Singapore. As long as you are non-compliant, almost any activity related to digital tokens could fall under regulatory scope. Whether you are in a luxury office building or on your home sofa, whether you are a CEO of a large company or a freelancer, as long as it involves digital token services.
Due to the numerous gray areas and vague definitions surrounding 'business premises' and 'conducting business,' MAS is likely to adopt a 'case-based' enforcement strategy—first kill a few chickens, then warn the monkeys.
Want to comply at the last minute? Sorry, MAS has clearly stated that they will review DTSP licenses with 'extreme caution,' and applications will only be approved under 'very limited circumstances.'
In Singapore, the era of regulatory arbitrage has officially ended, and the era of big fish eating small fish has arrived.