You may have heard that the Monetary Authority of Singapore (MAS) recently officially released its final regulatory response to the 'Digital Token Service Provider' (DTSP) system under the Payment Services Act and announced that it will be fully implemented by June 30, 2025, with no buffer period.
This time, it is no longer a policy probe in the consultation phase, nor a symbolic regulatory gesture of 'calling out'.
The signals released by MAS are very clear: no license, no involvement in any token-related business, regardless of whether clients are in Singapore or whether the business is on-chain.
On the surface, this is a new licensing requirement for token services, but in essence, it represents a structural reconstruction of the operational logic of Web3 projects.
Last week, there have been many interpretations of the document, and Portal Labs will not repeat a comprehensive interpretation. We will only discuss some of our views on the implementation of this regulation.
A structural cleanup under 'administrative norms'.
Some people view DTSP as an extended version of VASP, but in fact, it is not.
The launch of DTSP marks that MAS is attempting to systematically reconstruct the vague but broad concept of 'token services' and delineate the boundaries of what is permissible and impermissible in the form of legal provisions.
The so-called 'token services', from the perspective of MAS, are no longer limited to token issuance itself but encompass various behaviors that the project team may engage in, including issuance, promotion, trading, transfer, custody, OTC matching, and even providing technical or operational assistance.
In other words, as long as you are a part of this token mechanism, whether actively or passively, you may be regarded as a service provider.
The more critical change is that MAS has abandoned using registered locations or on-chain deployment as compliance judgment criteria, returning the core judgment standard to 'where people are and where business actions occur'.
This means that even if your contracts are written on-chain, systems are deployed in the cloud, and customers are spread globally, as long as you are permanently based in Singapore and are promoting token-related business, you are very likely to be considered as 'operating in Singapore'.
The classic remote architecture model of 'people in Singapore, business on-chain' has officially bid farewell to the regulatory vacuum period.
MAS's attitude toward this has also left no room for ambiguity. In this round of response, MAS clearly stated: it will take an 'extremely cautious' attitude toward DTSP licensing, only applicable to a very small number of applicants.
According to PANews data, there are currently only 33 crypto projects holding an MPI license, while this license has been open for applications for five years, making it easy to imagine the difficulty and approval rate of the upcoming DTSP license.
Therefore, Portal Labs believes that this is not a licensing competition, nor is it a goal that can be achieved solely through the efforts of the technical team. It is more like an active screening of project governance structures. Web3 project architectures lacking role separation, unclear funding paths, and ambiguous responsibility delineation will lose their qualification to remain in this round of cleanup.
However, this is not Singapore's hostility towards Web3 regulation, but rather a more targeted signal that, under the mainstream regulatory trend, the logic of regulatory arbitrage is gradually coming to an end.
Where to go is no longer the answer.
So, where else can we go?
Many Chinese Web3 project teams' first reaction is: move to Hong Kong.
This expectation is not unfounded. Over the past two years, Hong Kong has frequently released welcoming signals: advancing the VASP system, officials publicly expressing their stance, hosting Web3 carnivals... once regarded as the main candidate for 'taking over projects that Singapore has expelled'.
Just after the announcement of the new DTSP regulations in Singapore, Hong Kong legislator Wu Jiezhuang also immediately expressed welcome and published a bilingual statement on social media saying: 'If you are unable to continue operating in Singapore and intend to move to Hong Kong, feel free to contact me to understand the relevant situation. We are willing to provide assistance and welcome you to develop in Hong Kong!'
This statement undoubtedly sends a positive signal from Hong Kong about 'leveraging opportunities'. However, from the perspective of regulatory reality, the issues are far from simple.
Hong Kong's regulation is not lenient; it is another expression of a structured regulatory system:
At the CEX level, Hong Kong clearly requires trading platforms to operate with a license and be regulated by the SFC in accordance with the Securities and Futures Ordinance. Platforms must provide compliance solutions at key points such as user access, currency selection, and custody mechanisms, and must also establish independent auditing, anti-money laundering, and risk control systems. Compared to the past 'doing and adjusting' gray area path, Hong Kong's regulatory approach emphasizes 'proactive structural design', suitable for institutional platforms willing to operate in compliance for the long term.
At the level of token issuance, Hong Kong has not yet introduced specific laws for public token issuance, but referencing the recent regulatory trends in the United States, the European Union, and Singapore, while certain token issuances may still have room at this stage, if legislation progresses in the future, there is a possibility that the regulatory framework will tighten further.
In terms of landing Web3 projects, although Hong Kong frequently releases supportive signals, the current regulatory system that has truly landed still focuses on a few areas such as virtual asset trading platforms. For other forms of Web3 projects (such as DeFi, DAO, RWA issuers, etc.), exclusive regulatory channels have not yet been established. In reality, regulation tends to accept project types that have clear structures, sufficient information disclosure, and can be identified under the existing licensing system. To some extent, this resembles a 'partial opening under financial compliance orientation' rather than universal acceptance of all innovative forms.
In other words, Hong Kong indeed welcomes the landing of the Web3 industry, but the precondition is that you can match the regulatory rhythm. If your operational structure in Singapore is already crossing the line, it is likely that you will also be unable to land in Hong Kong soon after.
As for other alternative locations, such as Dubai, Portugal, Seychelles, or even some 'seemingly better' regional cities like Shenzhen, they either lack a mature financial regulatory framework or have unclear and unsustainable compliance paths. They may offer short-term refuge but are difficult to establish a long-term legitimacy foundation.
The DTSP regulations are not an isolated case but represent a broader regulatory trend: sovereign jurisdictions no longer accept a 'puzzle-like' Web3 structure based on registered locations, but begin to define responsibility based on 'where people are and where actions occur'.
Therefore, the more urgent issue that Web3 projects need to address is no longer 'where to move', but whether they can 'exist in compliance' after they move.
From this perspective, Singapore is not the endpoint, and Hong Kong is not the solution. The next stop for Web3 is not another 'arbitrage pit', but a comprehensive examination of structural capabilities, governance logic, and compliance mindset.
What should really be asked is: how to stay?
The biggest signal released by the DTSP regulations has never been a crackdown on a certain type of project or region, but rather a systematic update of regulatory logic.
In the past, many Web3 projects relied on 'puzzle-like structures' to navigate the compliance gray area: registered in country A, technical team in country B, market in country C, customers worldwide, KYC outsourced to country E, and funds flowing through country F. This seemingly distributed, but in fact 'non-penetrable responsibility' operational mode was once seen as the 'standard configuration' for Web3 projects.
But today, the perspective of regulation has fundamentally changed—no longer looking at where your company is registered or where the code is deployed, but directly anchoring:
Who controls the decision-making for token issuance?
Is the custody path for user assets and the flow of funds clear?
Where is the actual controller of the project located, and what responsibilities do they fulfill?
Is there a mechanism for penetrative governance, structural isolation, and clear delineation of rights and responsibilities?
What is being tested here is no longer the wording skills of a legal opinion but the overall 'structural capability' of Web3 project teams, that is, whether they can build a truly penetrable, accountable, and sustainably operational role system and rights and responsibilities framework.
In such a regulatory context, 'moving the registered location' has essentially ceased to be a solution. It resembles a game of risk transfer, shifting potential issues from one jurisdiction to another regulatory area that has yet to react, failing to fundamentally improve risk exposure.
From this perspective, DTSP is not just a notice for Web3 projects but also a turning point in the compliance perspective of investors. It makes a key question unavoidable: 'Am I investing in a project, or in a legal risk that has yet to be clearly identified?'
For investors, this regulatory evolution means an upgrade in judgment dimensions. In traditional investment logic, a white paper, a roadmap, and an AMA are sufficient to build confidence expectations. However, under the reality of tightening regulations, the 'structural transparency' of Web3 projects will become a necessary review item:
Does the token itself have a legal path and basis for issuance?
Is the control structure clear, and are there any internal responsibility overlaps or holding risks?
Have the founders faced excessive legal risks, and should their roles be separated and isolated?
Does the project have mechanisms for compliant financing, token issuance, and even exit in the future?
These questions are no longer for lawyers to answer alone; investors must also learn to raise and examine them.
In other words, regulation is forcing the entire Web3 market to enter a new stage of 'identity governance'. Web3 project teams can no longer rely solely on 'narratives' but must deliver answers in structural design; investors will also no longer only look at valuations but will question, 'Are you ready to be penetrated by regulation?'
DTSP is just the beginning; a larger wave of compliance is happening globally.