Singapore has long been viewed as a cryptocurrency paradise in Asia. However, with the Monetary Authority of Singapore (MAS) introducing new regulations for digital token service providers (DTSP), everything seems to be changing.
"The strictness of the new regulations has shocked many cryptocurrency practitioners"
Background and implementation of the new regulations
Singapore's cryptocurrency regulation did not happen overnight. As early as 2020, Singapore passed the Payment Services Act, bringing digital payment tokens under regulation.
In 2022, Singapore further passed the Financial Services and Markets Act (FSMA), introducing the DTSP license system. After multiple rounds of public consultations and feedback, the new regulations are set to be officially implemented on June 30, 2025.
MAS's new regulations require all cryptocurrency service providers registered or operating in Singapore to obtain a DTSP license; otherwise, they will face hefty fines and imprisonment.
This regulation has no transition period and directly cuts off the path of circumventing regulation through 'being registered in Singapore but only serving overseas customers.'
Core provisions of the new regulations
Definition and scope of DTSP: The new regulations define DTSP as individuals or companies with operating premises in Singapore, as well as Singapore-registered companies providing services to customers outside of Singapore, regardless of whether their actual operations are in Singapore or overseas.
Broad definition of operating premises: MAS has a very lenient definition of 'operating premises', almost covering any location where business is conducted. This means that even individuals working from home, as long as they engage in activities related to digital tokens, also need to be licensed.
Scope of digital token services: The scope of digital token services under the new regulations is extremely broad, almost encompassing all aspects of cryptocurrency business, including token issuance, custody services, brokerage services, transfer or payment services, etc.
Impact of the new regulations and industry response
The implementation of the new regulations may have far-reaching effects on Singapore's cryptocurrency industry.
Many unlicensed institutions and individual practitioners will face the risk of business disruption, while those already licensed or granted exemptions may gain a competitive advantage in the new regulatory environment.
Some cryptocurrency companies have begun considering relocating their businesses to other regions, such as Hong Kong, Dubai, and Malaysia.
These regions are actively attracting cryptocurrency businesses squeezed out by Singapore's new regulations, offering a more relaxed regulatory environment.
Conclusion: Singapore's new cryptocurrency regulations mark the end of the era of regulatory arbitrage
"The future development of Web3 must be built on a foundation of legality and compliance."
Although the new regulations pose challenges, they also create a fairer competitive environment for the industry and enhance the reputational value of licensed institutions.
For those companies willing to embrace regulation, the new rules may serve as a foundation for global expansion.
As the Asian cryptocurrency landscape is redrawn, businesses will find new opportunities in seeking regulatory environments that best fit their operations.
