Wu says Real June 6, 2025, 09:00 Shandong
Author | @agintender, @Johnny_nkc, @alexzuo4
Compiled by | Wu Says Blockchain
This article is for general informational reference only and does not constitute any form of legal opinion, investment advice, or other professional advice. Users should independently review and confirm with a qualified lawyer before taking any action based on this material.
1. Introduction
On June 30, 2025, the Monetary Authority of Singapore (MAS) officially implemented the new regulations for digital token service providers (DTSP), marking the formal establishment of a crypto asset regulatory system proposed in 2022 and developed over three years. The implementation of these new regulations has caused a certain panic among community practitioners, and this measure not only affects Web3 projects operating locally in Singapore but is also seen as a key event that may reshape the entire Asian crypto industry landscape. A large number of unlicensed institutions may be driven out of Singapore, while a small number of licensed institutions such as Coinbase, OKX, and HashKey will gain more benefits. Cities like Hong Kong, Dubai, Tokyo, Kuala Lumpur, and Bangkok will accommodate these retreating crowds.
2) The policy background: "Three-year preparation period" did not attract enough attention.
Singapore's regulatory changes in the crypto industry did not happen overnight but were planned over several years. Although the new regulations are generally regarded as "cliff-like regulation" by the outside world, in fact, MAS has incorporated digital payment tokens (DPT, i.e., cryptocurrencies) into regulation since 2020 through the Payment Services Act, requiring local businesses providing crypto exchange services to apply for licenses. Afterwards, MAS realized that there still existed regulatory arbitrage opportunities: some crypto businesses set up bases in Singapore but only served overseas clients to evade local licensing requirements. To close this loophole and comply with the standards of the Financial Action Task Force (FATF), Singapore passed the Financial Services and Markets Act (FSMA) in April 2022, which specifically introduced the licensing system for digital token service providers (DTSP) in Part 9. After the law was passed, MAS did not immediately enforce it strictly but reserved ample buffer time, planning to officially implement the new regulations in 2025. MAS had previously made it clear in the guidelines that no transitional period would be provided.
In other words, from the enactment of the law to its effectiveness, Singapore has given the industry nearly three years to adjust. Therefore, the recently announced new regulations by MAS are not a "cliff-like" sudden attack, but rather a regulatory path set years ago. However, when MAS emphasized again on May 30, 2025, the hard deadline of June 30 with no buffer period in its final regulatory response document, it still shocked the Asian crypto circle. Some practitioners previously hoped the regulations would be more lenient, but it has been proven that MAS's enforcement attitude is very firm, viewing the past few years as a window period for operators to adjust themselves. Overall, Singapore's DTSP licensing system has been established after long-term brewing and public consultation (e.g., the consultation report in late 2024), not a sudden "one-size-fits-all" turn. It was officially released in the form of legislation in 2022, after multiple rounds of soliciting opinions, and finally confirmed to be implemented in 2025.
However, due to the Chinese community's lack of attention to policy dynamics, most practitioners only felt regulatory pressure on the eve of implementation, leading to panic interpretations and the "Web3 great retreat" narrative.
3. Interpretation of Core Provisions
1. Definition of DTSP
DTSP stands for Digital Token Service Provider, and according to the definition in Section 137 of the FSM Act and the contents of Document 3.10, DTSP includes two types of entities:
1) Individuals or enterprises with a "place of business" in Singapore;
2) Regardless of whether the actual operating location is in Singapore or overseas, as long as it is a Singapore-registered company providing digital token services to overseas clients.
2. Scope of Application "In or From Singapore"
According to the above definitions, as long as individuals or companies engage in digital token-related businesses in Singapore, or companies registered in Singapore provide crypto services overseas, they fall under the DTSP regulatory scope. It is worth noting that the source of customers is no longer important: whether the service targets locals or overseas clients, as long as the operating entity has a connection to Singapore, a license is required; otherwise, it is engaging in illegal operations. For example:
· Core development/operations team located in Singapore;
· Servers or hosting systems located in Singapore;
· Marketing activities explicitly targeting Singapore customers;
· Receiving funds or assets from Singapore users;
That is, as long as services fall within the DTSP scope in Singapore or target Singapore users, a license application is required.
3. The broad definition of "Place of Business"
MAS's definition of "Place of Business" is very broad, almost equivalent to any location where business is conducted. The official clearly states that "Place of Business" can be any location used for business, even including temporary or mobile locations such as roadside stalls. As long as a person is within Singapore, whether in a company office, shared workspace, or on their own couch at home, if they engage in digital token-related business (and without a license), they are regarded as having a place of business in Singapore and engaging in illegal operations. This interpretation dispels some people's hopes — many practitioners previously believed that working remotely for overseas projects from home did not count as having a "Place of Business," but MAS clearly does not recognize this evasion. However, MAS does provide some flexibility: if the person is a formal employee of an overseas company working remotely from home, then the responsibility mainly lies with the employer, and the company must be licensed; individuals do not need to apply separately. The key to this regulation is how to define the identity of the "employee": does the founder of the startup count as an employee? What about the consultant with equity? These gray areas are currently unclear and may require further explanation from MAS in the future through FAQs, etc. Regardless, the regulatory intention is very clear — to eliminate behaviors that evade regulation under the guise of "being in Singapore and serving overseas," even working from home cannot be an excuse for evasion.
4. Scope of Covered Digital Token Services.
In simple terms, anything related to "transactions" is not allowed under DTSP licensing regulations. The scope of "digital token services" is extremely broad, almost encompassing all aspects of crypto business. According to the FSMA appendix, there are as many as ten types of related activities, mainly including:
1) Issuance or Arranging Issuance of digital tokens.
Any activities involving creating or issuing digital tokens for others, including IDOs, Launchpads, token generation events (TGEs), etc. Any services involving the provision or sale of digital tokens are subject to regulation. This not only refers to project parties issuing tokens directly to the public (similar to ICOs) but also includes inducing or prompting others to buy/sell tokens. In simple terms, whether as issuers or intermediaries, as long as they promote tokens and raise funds, a license is required.
2) Digital token custody services.
Holding or controlling clients' digital tokens, including cold wallet and hot wallet services. Whether providing custodial vaults, custodial wallets, or executing token-related instructions on behalf of clients (such as helping clients operate their token accounts or execute transactions), as long as the service provider has control over the tokens or their control tools, it falls under regulated activities. This means that providing clients with secure access to their assets' interfaces or systems is also subject to regulation.
3) Brokerage, matching, and trading arrangement services.
4) Operating centralized or decentralized order books, trading matching services (including OTC, DEX Aggregator).
This includes platforms for buying and selling digital tokens, as well as brokerage services that facilitate token trading for others, such as providing trading platform interfaces (UI/UX) to assist buyers and sellers in completing transactions.
4) Transfer or Payment Services.
Any service that assists clients in transferring tokens from one wallet or account to another (i.e., participating in transactions as an intermediary or cross-chain bridges also need to be documented). This includes payment gateways, bridging protocols, and wallet-provided "client transfer" functions.
5) Validation and Governance Participation services.
Representing clients in node validation (e.g., staking in the client's name), running validator nodes, or participating in on-chain governance voting. This may also involve receiving income or compensation from staking or governance.
6) Technology-enabling custody services.
Providing the infrastructure or technical support needed for custodial services (such as MPC wallet service providers, key custody, custodial API developers). Although not directly controlling assets, technology plays a key role in the asset control process.
The above scope shows that the DTSP license almost covers all services in the digital token lifecycle, from issuance, trading, and transfer to custody and operation, all of which cannot escape regulation.
4. What businesses do not need a license?
1) Pure Technical Consulting.
For example: project design, token economic model consulting, legal structure advice, product design guidance, etc., as long as you do not participate in actual asset custody, issuance, or execution of transactions, you will not be regarded as DTSP.
2. Marketing and Promotion Services
Including community management, advertising, brand design, etc. Even if you help a Web3 project with marketing in Singapore, as long as you do not involve asset flow, transaction matching, or token management, generally speaking, it is not regulated; however, if you directly arrange token sales/distributions or transfers for clients, regulatory obligations may be triggered.
5. Severity Analysis: Why MAS has shifted from leniency to strictness.
Web3 is not outside the law, and businesses involved in transactions/funds must be regulated anywhere; the only difference is that Singapore's policies are somewhat more "forward-looking". The strictness of the new regulations lies in uncompromising enforcement and stringent entry standards. Behind this is both external event stimulation and MAS's consistent regulatory philosophy:
1. Singapore's rule of law culture of "everything requires a license".
Singapore implements meticulous licensing management for any business activity: street vendors must complete regular training and obtain vendor licenses; even coffee shops must apply for public broadcast licenses if they want to play background music; after opening a hotel, if they also want to operate a swimming pool, they need to obtain additional licenses. Singapore's "crypto-friendly" stance does not mean no regulation for the industry; thus, the same applies to the crypto industry — it also needs to "pass the exam before working and undergo regular reviews"; essentially, it is a "registration system" rather than a "laissez-faire" friendliness. In Singapore, whatever you do must be regulated.
2. Investor and fund security is the "national policy-level" bottom line.
The Singapore government is a paternalistic government, very particular about citizens' welfare, especially regarding fund management. For example, to prevent retirees from having no money for old-age care, the Singapore government even restricts retirees' Central Provident Fund (CPF) withdrawals until they reach 55 years old. At the same time, MAS emphasizes the protection of investors' rights, highlighting AML/KYC, capital, and insurance requirements in crypto licenses to ensure that accountability and compensation mechanisms are in place should issues arise. They can promptly identify responsible parties, and there are corresponding deposits and insurance.
3. The "Fujian Gang" 3 billion SGD money laundering case triggered a regulatory red line.
The primary reason for MAS tightening regulations this time is to prevent cross-border financial crimes and money laundering. Digital token services often operate across borders via the internet, characterized by high anonymity and rapid capital flow, making them more susceptible to being exploited by criminals for money laundering or financing terrorism. Singapore has experienced some lessons in recent years, the most significant being the "Fujian Gang" cross-border money laundering case exposed in 2023. This case involved ten foreigners from Fujian, China, who laundered money through opening companies and bank accounts in Singapore, with an amount involved reaching up to 3 billion SGD, making it the largest money laundering case in Singapore's history. The severe nature of this incident even had some impact on public sentiment during Singapore's recent elections.
MAS is not afraid of fraudulent platforms damaging Singapore's reputation; the Singapore government has rich experience and means to respond to such incidents. Through Singapore's IAL list (https://mas.gov.sg/investor-alert-list), it can be noted that what the Singapore government truly fears is the inflow or outflow of illegal funds causing diplomatic crises and its position as a financial reservoir in the Asia region.
4. License "Strict Entry and Management" originates from the "de-mystification" of review practices.
MAS's toughness is also reflected in its stringent entry standards. According to the guidelines, MAS states that it will "only consider issuing DTSP licenses in very few cases," and has set forth near-draconian approval conditions.
1) Applicants must prove that their business model has economic rationality, providing sufficient reasons for operating in Singapore without serving the local market (in other words, they must convince MAS why they only do overseas business).
2) Applicants must assure MAS that their operational methods will not raise regulatory concerns, and that they have obtained regulatory licenses or are subject to regulation in all foreign jurisdictions where they provide services, complying with international regulatory standards (such as those set by the Financial Stability Board, IOSCO, and FATF). In other words, companies must be legal and compliant in every country where their customers are located, which is nearly impossible for many new projects.
3) MAS also emphasizes that the applicant's organizational structure and compliance capabilities cannot cause regulatory discomfort, such as having sound corporate governance, sufficient manpower and financial resources to fulfill regulatory obligations.
Therefore, after applications were opened in 2021, during the peak period, over 500 institutions rushed for licenses, but most had mediocre qualifications, with an approval rate of less than 10%; by the end of 2024, only 13 had obtained primary DPT licenses, and the total number of license holders increased from 16 to 29, coupled with MAS's tight regulatory personnel, the approval process has become even stricter.
5. Web3 has not brought "embedded" economic benefits to Singapore.
The crypto industry has surged into Singapore, but many projects have low registered capital, renting luxurious offices without paying local taxes; funds do not remain in local banks but continuously consume, pushing up housing prices, salaries, and vehicle ownership certificate costs, leading to a deterioration in social evaluation. Local voters are not buying it, and the government naturally has no intention of "going through the motions".
6. Industry Impact Assessment: Who will be affected, and will Web3 experience a "great retreat"?
1. Affected groups:
Individual practitioners: such as independent developers, crypto project consultants, market makers, miners, KOLs (self-media people), community operators, project founders, business development personnel, etc. In the past, these individuals did not require licenses to engage in Web3 work in Singapore, but under the new regulations, everyone may have a sword hanging over their heads. For example, independent developers writing smart contracts for overseas blockchain projects, consultants providing solutions for token issuance, and KOLs writing token analyses; these activities theoretically fall under "providing digital token services."
Unlicensed institutions: such as crypto exchanges (whether centralized CEX or decentralized DEX) that have not yet obtained PSA licenses, DeFi project teams, NFT trading platforms, crypto wallet providers, cross-border payment networks, and various blockchain startups. These institutions, if they have personnel or company registrations in Singapore but without any licenses, will face the risk of business interruption first. Especially for some entrepreneurial projects that used to be rooted in Singapore and focused on overseas markets, if they do not meet the application criteria, it is equivalent to being sentenced to "death row" and will not be able to continue operating in Singapore. According to the new regulations, they must cease related operations by June 30 at the latest; otherwise, they will be operating illegally.
2. Exempt groups:
Institutions that are already licensed or exempt under PSA/SFA/FAA do not need to apply for DTSP licenses under FSMA, but must implement additional obligations under FSMA.
Typical examples:
Custodian: If already licensed/exempt under PSA, even when dealing with overseas clients, there is no need to obtain a DTSP license again. But they must fulfill additional regulatory obligations under FSMA regarding technology, auditing, and AML/CFT.
FSMA additional compliance checklist:
1) Technical Risk Management (TRM): architecture, backup, penetration testing, and third-party services must meet industry best practices.
2) Annual independent audit report: must cover both financial and system controls, and be submitted within the prescribed time.
3) Higher AML/CFT requirements: stricter KYC, transaction monitoring, and suspicious reporting obligations.
4) Significant security incidents must be reported to MAS within 1 hour: data breaches, loss of private keys, continuous downtime, etc. must be reported immediately.
5) Prohibition of high-value cash transactions: cash payments of SGD 20,000 or more per transaction are fully banned.
Singapore officially implemented the DTSP licensing system, marking the end of the regulatory arbitrage era and entering a new phase. Amidst the global tightening of regulation, major jurisdictions are gradually filling the regulatory gaps for crypto activities; Singapore is just one of the more aggressive examples. The previously exploited model of "establishing in Singapore and providing services overseas" is now uniformly brought under regulation, undoubtedly sending a clear signal to the industry: the future development of Web3 must be based on legality and compliance, attempting to integrate the regulatory authority scattered under PSA/SFA/FAA, and eliminate the "gray runway", shifting the regulatory focus from "whether licensed" to "whether compliant". Regulation on stablecoins is also being upgraded in parallel.
1) Single Currency Stablecoin (SCS): independent framework implemented.
2) Other stablecoins: still regarded as DPT, remaining under PSA; if serving as underlying assets for derivatives, they may fall under SFA regulation.
The gray area outside of regulation will become increasingly smaller. Compliance will become mainstream, and the era of exploiting differences in jurisdictions to "find loopholes" is ending. If Asian crypto entrepreneurs were keen on finding regulatory havens from 2018 to 2021, after 2025, most that can stand firm will be companies willing to embrace regulation and possessing compliance strengths. Major financial centers in the region are also competing to launch clear regulatory frameworks; rather than companies "fleeing" from a location, they are looking for a regulatory environment that best fits their business.
7. Two self-check questions for operators.
1. Am I already licensed or exempt under the PSA/SFA system?
2. Do I provide any DT services to overseas clients?
If the answer to question 1 is "yes", no new license is required, but compliance upgrades must be initiated immediately.
If the answer to question 1 is "no," then a license must be obtained or the business closed by June 30.
MAS's regulatory screws will only tighten — don't wait until the last day to act. Licensed institutions should regard "compliance upgrades" as a normalization project; teams that are not yet licensed but lack a complete set of compliance resources should decide early whether to apply, merge, or withdraw. This time, with no transitional period and a requirement for violators to immediately cease operations, the tough measures are also sending a signal to the market: Singapore will not be a safe haven for uncontrolled crypto business. Even if it was once considered a "crypto-friendly" place, loopholes are now absolutely not allowed. This move by MAS indicates that Singapore's crypto regulatory environment has tightened significantly, and many local companies will either incur high costs to obtain licenses or will have to restructure their businesses and exit overseas markets. They are willing to bear the cost of some business losses in the short term rather than allowing Singapore's international reputation and financial security to be eroded.
8. Indirect benefits for surrounding regions.
Singapore's actions may indirectly benefit other regions, prompting a new division and migration in the Asian crypto landscape. As another crypto center in Asia, Hong Kong has been vigorously promoting the legalization of virtual assets and the construction of regulatory frameworks in recent years. Coinciding with Singapore's tightening, Hong Kong is actively taking on the crypto business that is being squeezed out. Hong Kong Legislative Council member and National Committee member Wu Jiezhuang tweeted that the Singapore government earlier released guidelines on licensing for digital token service providers, with new policies for companies, institutions, and people engaged in virtual assets. Since Hong Kong issued its virtual asset declaration in 2022, it has welcomed the industry to develop in Hong Kong; according to informal statistics, over a thousand Web3 companies have settled in Hong Kong. Companies engaged in related industries in Singapore are welcome to move their headquarters and teams to Hong Kong, and they are willing to provide policy and landing assistance. The intention is to make Hong Kong a leading crypto hub in Asia.
Link:
https://x.com/agintender/status/1930471612379471933?s=19
https://x.com/agintender/status/1930483789689696527?s=19
https://x.com/agintender/status/1930295802062352709?s=19
https://x.com/Johnny_nkc/status/1930220824629522613?t=Y_x1ZyMAUrcWeNIvKJ37SA&s=19
https://x.com/alexzuo4/status/1930566675721761129?t=LTpNuTZ9-b_w6FNXAqe13w&s=19
https://www.mas.gov.sg/-/media/guidelines-on-licensing-for-digital-token-service-providers.pdf
https://www.mas.gov.sg/-/media/mas/news-and-publications/consultation-papers/2022-proposed-regulatory-measures-for-dpt-services/consultation-paper-on-proposed-regulatory-measures-for-digital-payment-token-services-v3.pdf
https://www.mas.gov.sg/-/media/mas-media-library/publications/consultations/amld/2024/dtsp-consultation---final-for-publication.pdf
