Recently, a piece by Spinach, the head of Pharos Asia Pacific, has caused a stir across the internet, painting a picture of an impending large-scale withdrawal from Singapore's Web3, marking the end of the regulatory arbitrage era...

On May 30, 2025, MAS released a response document for the new regulations concerning Digital Token Service Providers (DTSP), and many people have yet to realize the impact this has on the Asian Web3 industry or the entire Web3 industry. The information continues to ferment, and more people are starting to care about what this actually means.

Episode 001 of the Crypto Tavern, focusing on the latest Web3 regulations in Singapore!

The tavern invites:

Liu Honglin, Founder of Mankun Law Firm

@Honglin_lawyer

Sam Techub News COO

@ixsamchow

Shao Jiadian, Partner Lawyer at Mankun Law Firm

@Web3_Jayden

Bai Zhen, Head of Mankun Law Firm's Hong Kong Office

@Bai_Zhen_11

Spinach Pharos Head of Asia Pacific Strategy

@bocaibocai_

Tavern Hosts: Meg Mankun (Chengdu) Builder

@MegZhang1986

Dongdong Robin, Mankun Researcher

@dongdongRobin

Meg: Hello everyone, welcome to our Mankun Crypto Tavern. Our slogan is that we never close. I am Meg, and today Dongdong, also known as Robin, and I will be co-hosting. We welcome you to join our first online event where the focus will mainly be on the latest regulatory issues in Singapore. We invited our firm's founder, Director Liu, to share the origins of the Crypto Tavern.

Lawyer Liu Honglin: Okay, thank you, Meg. The Crypto Tavern was originally driven by Meg and Dongdong. They are our researchers in Shenzhen and Chengdu and also BD leaders. Meg is a senior industry practitioner who has done a lot of industry-related work in Shenzhen. They have been thinking about how to bring Mankun closer to industry partners and facilitate more exchanges among friends. Thus, they planned this weekly event called the Crypto Tavern, which is relaxed and enjoyable, discussing recent happenings and industry dynamics.

In addition to Mankun's (Entrepreneurship in Web3.0) interview column every Wednesday evening, this column provides a more relaxed topic. Entrepreneurship means risk and responsibility for many, which can feel heavy, while the tavern format is more relaxed. They mentioned Thursday, and I thought of the 'Crazy Thursday' meme, so I connected it: 'Crypto Tavern, Crazy Thursday.' Today marks the online opening, and as a tavern guest, I thank Meg and Dongdong for their efforts. Welcome everyone to give them a thumbs up, and thank you all for visiting our online tavern!

Dongdong Robin: Thank you, Lawyer Honglin, good evening to all listeners and guests! I am very happy that today marks the grand opening of the tavern. Meg and I, as hosts, have discussed a lot and hope to find a Crazy Thursday in addition to the (Entrepreneurship in Web3.0) event every Wednesday, with broader topics and no limits. We hope to invite guests to discuss hot topics in Web3, whether it be venting, investment, or entrepreneurship, or not setting a specific topic, inviting entrepreneurs, investors, KOLs, and media to gather in the tavern and chat like at the bar. Next, please Meg to share her thoughts.

Meg: The legal profession is very rigorous and meticulous, while the Crypto or Web3 track has a lot of crazy aspects, like two extremes. The Crypto Tavern perfectly connects this feeling. On Twitter, we can discuss more openly, which is why we thought to host this activity on this channel. We hope everyone joins our Twitter Space.

Today we officially begin.

Q1: Singapore has long been regarded as the global Web3 paradise; why is it evaluated this way? Can everyone share their impressions of Singapore's Web3?

Sam:

Singapore has long been regarded as the Web3 paradise of Asia and even globally, attracting many practitioners. Let me briefly explain. In 2021, the country completely banned cryptocurrency trading, and the SEC was also cracking down on crypto enterprises. The most attractive aspect of Singapore is its zero tax policy; in Southeast Asia, including Singapore, Thailand, Malaysia, Taiwan, and Hong Kong, crypto-related taxes are zero, and the issuance of compliant licenses is relatively high. The zero tax significantly impacts the cost for enterprises, as ordinary corporate tax rates can be quite high, while the crypto industry might not have that high of a profit margin.

In the early days, Singapore implemented a 0% capital gains tax, combined with a compliant attitude and regulatory environment, attracting many enterprises and entrepreneurs. Go to welcome places to do compliant business and earn compliant money. Singapore was similar in its early days. However, after barbaric growth, negative events occurred, such as some obtaining licenses to issue disorderly projects or being involved in telemarketing and fraud, affecting the normal financial system. Thus, this regulatory shift is traceable, providing a reasonable contraction after a cycle of barbaric growth.

Lawyer Shao Jiadian:

I studied in Singapore for my master's degree, and my impression is that Singapore's urban management, social governance, and legal system are like tending a garden, meticulous and orderly. Their policies are not spontaneous but very well-structured. The reasons for Singapore being viewed as a Web3 paradise are: first, the early introduction of regulatory sandboxes and crypto regulations attracting entrepreneurs; second, tax incentives; third, as a financial center, Singapore has a clear advantage in technological and financial talent. Web3 combines technology, the internet, and finance, and Singapore has an excellent talent pool. Additionally, the blending of Eastern and Western cultures, with proficiency in both Chinese and English, makes it suitable for entrepreneurs from both sides. At that time, the US and mainland China were cracking down on the crypto industry, leading many project parties to choose Singapore; some projects even set up foundations or entities in Singapore without being located there, creating the impression of a Web3 paradise.

Bai Zhen:

I am in Hong Kong, and the previous speakers are quite right. Singapore has become a Web3 paradise since 2021, thanks to its zero capital gains tax, regulatory sandbox, and a perfect legal system. MAS positions it as Asia's crypto hub, attracting FTX, Three Arrows Capital, and allowing companies to serve global users without local licenses, leveraging Singapore as a base for global operations is a regulatory arbitrage advantage. Singapore is very capable, focusing on pragmatism, combining the best aspects of the West and conservative practices, acting quickly, and its regulatory style is more advanced than Hong Kong and the US. Recent negative events may prompt regulatory changes.

Lawyer Liu Honglin:

The previous speakers comprehensively covered this; I would like to add one point. Spinach's article mentioned that Singapore is completely exterminating Web3, while my viewpoint is slightly different. Singapore's overall style is to let the bullets fly for a while; regulatory policies have been thrown out in previous years and have only recently gained attention. Negative events, such as the Fujian money laundering team and the FTX collapse, have affected Singapore's image and sovereign fund investments. Teams, projects, and funds involved in virtual currencies are often related to gray and black industries or money laundering, putting significant pressure on regulatory departments. Raising thresholds is a feasible way to eliminate gray and black industries or weaker teams, allowing institutions with compliance budgets and substantial funds to remain. From a positive perspective, this round of actions aims to retain large institutions and encourage compliant development while essentially rejecting small startups or teams with weak compliance abilities. This might be a breaking point.

Sam added:

I don't fully agree with Spinach's term 'encirclement.' The early barbaric development has evolved into a system today. The market pie has grown, with leading institutions consolidating their positions through legislation, excluding small or non-compliant teams. Singapore's limited growth points under the impact of the change in Hong Kong's Web3 attitude make contraction a reasonable choice. The Payment Services Act was introduced in 2020, and from 2020 to 2021, tens of millions of Singapore dollars were invested to support blockchain, similar to Hong Kong's actions in 2023.

Singapore's government investment institutions, such as GIC, have also invested in Bitcoin, DC, and other projects. The tightening of regulations aims to allow compliant funds to enter and enhance the value of the Web3 industry. Although Singapore is small with a population less than Hong Kong, it shrinks to retain the leaders.

Dongdong Robin:

Thank you to the guests for sharing. The reasons for Singapore being viewed as a Web3 paradise are clear: zero taxes, regulatory sandboxes, talent advantages, and the blending of Eastern and Western cultures make it a hotbed for entrepreneurship. This regulation does not necessarily indicate a complete extermination but aims for standardization, retaining compliant large institutions and promoting long-term industry development.

Q2: This MAS new regulation is termed a cliff-like tightening; what is DTSP? Simply put, what exactly is regulated?

Lawyer Shao Jiadian:

In fact, this regulation is not new; it originates from Chapter Nine of the 2022 (Financial Services and Markets Act), targeting Digital Token Service Providers (DTSP), which means individuals, partnerships, or companies registered or primarily operating in Singapore providing digital token services to overseas clients must obtain licenses. An opinion draft was released in October 2024, a response document was published on May 30, 2025, and will take effect on June 30. Those without a license must stop providing services to overseas. The regulatory scope includes virtual asset and fiat currency exchanges, transfers, payments, custody, agency issuance, sales, intermediary services, investment advice, etc. It does not target services provided locally in Singapore (which already have licensing requirements) or non-digital token services. Teacher Spinach's title may be broad; it is not a complete extermination of Web3, but rather tightening regulations on cross-border services. This requirement has been in place since 2022, needing clarification on the applicable scope.

Spinach:

I found that friends in Singapore's Web3 circle mentioned the significant impact of the new regulations. After research, I discovered it is indeed serious. Few people discuss it on Twitter; I spent four to five hours reviewing the law and wrote an article that unexpectedly caused a stir in the entire circle and was labeled as the culprit of panic. The (Financial Services and Markets Act) (FSM) was passed in 2022 and is being implemented in phases, with the DTSP regulations taking effect on June 30, 2025. It had been announced in 2022, but over the three years, people seemed to have forgotten. Only after the May 30 MAS response document did it gain attention. My article went viral because many were unaware of the MAS's stance and specific regulations. I had worked with MAS for the past two years; the previous government supported innovation, while the new one leans towards AI and is unfriendly to Web3. MAS is incorporating all individuals and institutions involved in Web3 services into regulation, which will be enforceable starting June 30, with interpretation rights reserved for MAS, and its vagueness has caused panic.

Dongdong Robin:

Thank you, Lawyer Shao and Teacher Spinach. Lawyer Shao has detailed the origins and developments of the new regulations, clarifying the scope and exceptions for DTSP regulation. Teacher Spinach pointed out that the ambiguity of the new regulations and MAS's tough stance have triggered industry panic, helping us gain a clearer understanding of the new regulations.

Q3: A point everyone is concerned about: Will remote working be illegal? Baker McKenzie also asked this question to MAS; can anyone explain?

Spinach:

During the 2024 opinion solicitation, the law firm asked whether remote working is regulated. MAS responded: Employees of overseas companies working from home in Singapore, serving only overseas clients, and the work is part of the labor contract, do not need a license. However, if communicating with overseas clients in a non-residential location, such as an office, it may be subject to regulation. MAS's explanations are vague; for example, whether overseas company executives or directors handling business while on vacation in Singapore counts, MAS did not clarify, leaving loopholes and reserving broad enforcement rights, causing panic.

Meg:

It sounds like regulation during the pandemic, where substance is more important than form. As long as it serves Singapore citizens or provides services, it may trigger regulations. Please let Lawyer Shao explain in plain language.

Lawyer Shao Jiadian:

I reviewed the MAS response document and the questions from Baker McKenzie. MAS's simple response: If providing digital token services from Singapore to overseas, a license is required; if working for an overseas company to complete internal tasks, no license is needed. The core is distinguishing internal services (within the company) from external services (facing clients). Individuals or independent studios providing services to overseas from Singapore, such as sales, promotion, or investment advice, need a license. The presence of a business location does not affect this determination. KOLs or independent BDs promoting projects may fall under regulation and must be cautious to avoid being seen as providing investment advice. Short business activities during travel do not fall under regulatory scrutiny.

Sam:

The document defines two types of regulatory subjects: first, individuals or businesses operating at a business location in Singapore; second, Singapore-registered companies providing services to overseas. If not at a business location, such as a personal residence, regulatory avoidance may occur. For example, KOLs creating cryptocurrency content at home may not be considered a business location. However, MAS has not clearly defined this and actual behavior is observed. I know several YouTubers in Singapore, such as Xiao Mo, who moved to Singapore for tax reasons; they are not at a business location and theoretically may not be regulated.

Lawyer Shao Jiadian added:

MAS's response did not mention the requirement for a business location but stated that providing services from Singapore to overseas requires a license. The exception is for overseas company employees completing internal work for their employer. If operating in Singapore long-term and serving overseas clients, regardless of whether at home or in a shared office, a license may be required. Short business activities during travel do not fall under regulatory scrutiny.

Q4: What is the motivation behind the Singapore government?

Lawyer Liu Honglin:

There are several motivations: first, market standardization; after barbaric growth, it is necessary to attract compliant funds and ensure tax revenue and sustainable development; second, to respond to negative events, such as money laundering and the FTX collapse, affecting Singapore's image and sovereign funds, putting pressure on regulatory departments; third, for long-term development, raising thresholds to eliminate gray and black industries and weaker teams, encouraging compliant large institutions to remain.

Sam:

As I mentioned earlier, the motivation is personal speculation. The role of regulations is to guide market standardization, ensure tax revenue and sustainable development. No one wants Singapore to be as chaotic as Somalia. During the ICO era from 2017 to 2018, Singapore established foundations to make money, with regulatory experience predating Hong Kong. After the market matured, the pie grew larger, with shell companies and gray/black industries affecting the business environment. Regulatory intervention makes business more sustainable, attracts traditional finance and compliant funds, and enhances industry value.

Dongdong Robin:

Both Director and Teacher Sam mentioned that Singapore's regulation is not aimed at eliminating Web3, but rather at promoting standardization after experiencing barbaric growth. The core motivations are to respond to negative events, maintain international image, and attract compliant funds, aiming to make the industry healthier and more sustainable.

Bai Zhen:

Hong Kong may seize the opportunity to attract Singapore's Web3 talents, but it requires a more transparent judicial system, lower costs, and more talent. Web3 can upgrade traditional finance, but Hong Kong missed early opportunities by prioritizing real estate in the past, needing to accelerate reforms. Ten years ago, Hong Kong failed to capture opportunities, such as Fireblocks, Securitize, which did not land in Hong Kong. Hong Kong needs to understand the potential of Web3, but judicial transparency, cost reduction, and English proficiency are insufficient, needing to attract real talent.

Lawyer Shao Jiadian:

Singapore's tightening of regulations targets regulatory arbitrage, such as registering a Singapore company but serving overseas, fearing reputation damage. The MAS response document clearly states that digital token services are high-risk areas for anti-money laundering, and cross-border services affect Singapore's image. Legitimate projects remain popular. Singapore, Hong Kong, the US (with the crypto president in office, the SEC optimizing regulations), and the UAE (with aggressive policies) are Web3-friendly regions.

Sam:

As a media based in Hong Kong, funded by the Gao Feng Group, we are obligated to promote Hong Kong's policies. However, in my personal opinion, Hong Kong has high compliance costs and is suitable for large enterprises. Small projects could go to Europe (Poland with 1400+ licenses, Europe with 2700-2800), Canada (1400+), Australia (400+), or Southeast Asia (Malaysia with single-digit licenses, Thailand). Web3 practitioners are accustomed to a digital nomad lifestyle, with strong cross-border attributes, making compliance region selection flexible.

Meg:

Web3 practitioners are like digital nomads, communicating across borders, sharing rules like players from different countries in a casino. I have been to Singapore, where financial and regulatory advantages are strong, but tightening regulations may eliminate low-profit projects, prioritizing compliant products. Malaysia, like Kuala Lumpur, is an emerging Web3 hub, with a certain exchange deploying a team of 300 people. Everyone shared different perspectives; Singapore remains a significant choice for Web3, but places like Hong Kong, the US, the UAE, and Malaysia all have their own advantages. The digital nomad characteristic of Web3 allows practitioners to choose flexibly; tightening regulations may signal industry maturation, encouraging compliant development.

Thank you to all the guests and listeners for your support tonight! Every Thursday at 8 PM Beijing time, the (Crypto Tavern) space will be broadcast on time; feel free to scan the code to join the listener group and get the latest news for each episode. The tavern also looks forward to more guests joining; teachers are welcome to message the hosts!

/END.

Article authors: Liu Honglin, Zheng Hongde