Original Deep Tide TechFlow Deep Tide TechFlow June 5, 2025, 18:05 Henan
The once Web3 paradise Singapore is starting to drive people away.
On May 30, the Monetary Authority of Singapore (MAS) officially released the final policy guidelines for 'Digital Token Service Providers (DTSP),' with a very firm stance in the document:
All crypto service providers registered or operating in Singapore must cease providing services to overseas clients by June 30, 2025, unless they have obtained a DTSP license.
There is no transition period for this regulation; violators will be punished according to the law, and companies found to violate the law could face fines of up to 250,000 Singapore dollars (200,000 USD) and imprisonment for up to three years.
This policy is like a bolt from the blue, causing many cryptocurrency practitioners in Singapore to feel a shock.
As Asia's Web3 headquarters, Singapore has always played the perfect place for 'regulatory arbitrage.'
In the past, Singapore implemented a regulatory strategy of 'differentiation between domestic and foreign,' allowing companies registered in Singapore to freely provide services to overseas clients, with stricter regulatory requirements only for businesses targeting the local market.
Especially as China implements a comprehensive ban and the U.S. SEC tightens enforcement, Singapore has timely played the role of a safe harbor, providing a secure landing point for many crypto exchanges, funds, and project parties, leading to waves of migration of crypto businesses. Even Singapore's sovereign wealth fund Temasek has previously invested in crypto companies like FTX and Immutable, solidifying Singapore's position as a crypto hub in Asia.
However, the clarity of this regulatory policy has gradually plugged the loopholes of 'regulatory arbitrage.'
According to the final regulatory response document for DTSPs published by the MAS, several of the strictest key points are:
1. Comprehensive management of cross-border business: Regardless of whether the service targets local or overseas clients, as long as digital token-related business is conducted within Singapore, a DTSP license is required, which directly cuts off the previous regulatory arbitrage path of 'registered in Singapore but only serving overseas clients.'
2. The definition of 'business premises' is extremely broad: MAS defines 'business premises' as 'any location in Singapore used by a licensee to conduct business,' including movable stalls. This definition almost covers all possible business locations, regardless of size.
3. Dual coverage for individuals and institutions: Regulated entities include both individuals or partnerships operating in Singapore's business premises and Singapore companies conducting digital token service business outside of Singapore, achieving comprehensive coverage of subjects.
Additionally, although MAS stated that overseas company employees working from home would be acceptable, the definition of 'employee' is vague, leaving it entirely to MAS's discretion whether project founders and shareholders are considered employees.
Why did the MAS suddenly take strong action?
This is not a sudden policy attack by the Monetary Authority of Singapore on cryptocurrency companies. As early as 2022, the MAS introduced the Financial Services and Markets Act, with the ninth section dedicated to cryptocurrency regulation. They conducted multiple public consultations and drafts, and the document released on May 30 responded to the consultations while detailing specific regulatory methods, regulations, notices, and DTSP licensing guidelines.
According to the consultation document, the core consideration for MAS is that 'some cryptocurrency businesses may damage Singapore's reputation.'
The original text states, 'Due to the internet and cross-border characteristics of digital token services, digital token service providers (DTSPs) are more likely to face money laundering/terrorist financing (ML/TF) risks... The main risk posed by DTSPs to Singapore will be reputational risk, which could damage Singapore's reputation if they are involved in or misused for illegal purposes.'
Everything may trace back to 2022 when the cryptocurrency exchange FTX, in which Temasek invested, and the local crypto fund Three Arrows Capital faced collapse, severely damaging Singapore's financial reputation. The then Singapore Finance Minister, Lawrence Wong (now Prime Minister), publicly stated that this investment caused reputational damage, and Temasek subsequently imposed salary cuts on the investment team and senior management.
Under the latest regulations, which cryptocurrency businesses will be affected?
According to the consultation document, all entities related to cryptocurrency asset trading must be licensed, including cryptocurrency trading platforms, cryptocurrency custody, cryptocurrency transfers, and cryptocurrency issuance...
With June 30, 2025, approaching, panic from social media like WeChat Moments envelops the hearts of crypto practitioners in Singapore, but more emotions revolve around confusion.
"I didn't know about the relevant policies before; it suddenly exploded in my social media circle. Currently, opinions are divided, and we can only wait and see. At worst, we can leave Singapore and go to neighboring Malaysia," said Adam (a pseudonym), a project practitioner.
Kevin, a practitioner from a crypto exchange, is very dejected. Their company has already made plans to relocate the office to Hong Kong, but he doesn't know the specific timeline. Having lived in Singapore for 2 years, he is preparing to apply for Singapore permanent residency (PR), and with this sudden turn of events, he feels regret and reluctance.
Previously, Hong Kong legislator Wu Jiezhuang posted on social media to attract crypto practitioners from Singapore to settle in Hong Kong. He stated, "Singapore recently released (guidelines for digital token service provider licensing), proposing new policies for companies, institutions, and individuals engaged in virtual assets. Since Hong Kong released the virtual asset declaration in 2022, it has actively welcomed the industry to develop in Hong Kong. According to informal statistics, over a thousand Web3 companies have settled in Hong Kong. If you are currently engaged in the relevant industry in Singapore and wish to relocate your headquarters and staff to Hong Kong, I am willing to provide assistance. Welcome to develop in Hong Kong!"
Lily, COO of crypto custody platform Cobo and former General Counsel of PAG, believes that the panic around this policy has been exaggerated. The policy maintains MAS's consistent regulatory style, primarily affecting the front-end and substantive operating teams of non-licensed exchanges in Singapore, without impacting exempt companies like Cobo and those that have already obtained licenses, nor those whose business scope does not fall under licensed regulatory oversight.
According to information from the Singapore MAS official website, 24 companies, including COBO, ANTALPHA, CEFFU, and MATRIXPORT, are on the exemption list, while 33 companies, including BITGO, CIRCLE, COINBASE, GSR, Hashkey, and OKX SG, have already obtained DTSP licenses.
For these licensed and exempt companies, the new policy has created a fairer competitive environment, enhancing the reputation value of licensed institutions and laying the foundation for global expansion.
Correspondingly, as the era of regulatory arbitrage ends, some offshore crypto companies based in Singapore have begun to migrate to places such as Hong Kong, Dubai, and Malaysia.
Adam believes that the departure of crypto practitioners from Singapore is a major trend, and this policy only accelerates that process.
"Singapore's cost of living is high, boring, and more importantly, there are too few opportunities to make money now; I want to live in Japan and make money in Dubai."
Once upon a time, Singapore was known as the 'Jerusalem of crypto-Jews.' Now its doors are tightening, and crypto-Jews must move with the water and grass, continuing to wander.
