Singapore’s new DTSP Guidelines end regulatory leniency, enforcing strict compliance for all crypto firms operating within its jurisdiction by June 30, 2025.
The high cost of compliance may force over half of crypto projects to exit Singapore, sparking relocations to Hong Kong, Dubai, and Tokyo.
While boosting transparency and investor protection, the regulations risk stifling innovation and weakening Singapore’s global crypto competitiveness.
At the end of May 2025, the Monetary Authority of Singapore (MAS) released the Digital Token Service Providers Licensing Guidelines (DTSP Guidelines), which will come into effect on June 30, marking a new phase in Singapore’s approach to cryptocurrency regulation.
Source：MAS
This policy not only tightens oversight on digital token service providers but also fundamentally transforms Singapore’s role as a global crypto hub.
It signals the end of Singapore’s era of “regulatory arbitrage,” in which lenient policies attracted crypto firms worldwide, and ushers in a new chapter where compliance is at the core.
REGULATORY BACKGROUND: FROM OPEN INNOVATION TO RISK RESPONSE
For years, Singapore has leveraged its open financial environment and support for innovation to become a hotspot for the global crypto industry.
Since the 2019 Payment Services Act (PSA) came into effect, Singapore provided a relatively relaxed regulatory framework for blockchain startups, crypto exchanges, and Web3 projects.
Global giants like Binance and Coinbase set up regional headquarters or key operations in Singapore, attracting massive capital, talent, and technological development.
By 2023, crypto-related companies in Singapore accounted for nearly a quarter of the Asian market, reflecting its attractiveness.
However, the rapid expansion of the crypto sector also brought new risks.
In 2024, crypto scams surged in Singapore, accounting for a quarter of the nation’s total scam losses, with damages reaching hundreds of millions of SGD.
Globally, growing pressure around anti-money laundering (AML) and counter-financing of terrorism (CFT), coupled with high-profile platform collapses like FTX in 2022–2023, exposed regulatory weaknesses.
These developments prompted MAS to reassess its approach and adopt stricter controls to balance innovation and risk.
The DTSP Guidelines introduced in May 2025 are a product of this reassessment, aiming to clean up the industry, protect investors, and maintain financial stability through comprehensive compliance mandates.
CORE OF THE NEW REGULATIONS: COMPREHENSIVE COVERAGE AND STRICT COMPLIANCE
The DTSP Guidelines aim for holistic regulation of digital token service providers, covering nearly every aspect of the crypto industry.
Whether it’s token issuance, trading platforms, custodial services, cross-border payments, or node operations on blockchain networks, any business with any kind of presence in Singapore must comply.
The definition of “business presence” is broad, including not only registered offices but even shared workspaces or temporary use of cafés. This wide definition means virtually all crypto projects operating in Singapore fall within the regulatory net.
Obtaining a license from MAS is now the only legal path to continue operations.
The licensing requirements are stringent: firms must demonstrate adequate capital, AML/CFT mechanisms, robust cybersecurity, and a local presence including the appointment of Singapore-based executives.
However, the new rules exempt certain activities: service providers dealing with utility tokens (e.g., for on-chain voting) and governance tokens (e.g., for membership rights) are granted partial leniency, often not requiring a license.
Still, for businesses involving high AML risk—such as teams serving only overseas clients—license approval is virtually impossible.
Most notably, there is no transition period: all affected entities must be fully compliant by June 30, or cease operations immediately or face legal consequences. This tough enforcement stance adds significant compliance pressure on the industry.
INDUSTRY IMPACT: EXITS, RELOCATIONS, AND INNOVATION CHALLENGES
The implementation of the DTSP Guidelines has had a profound impact on Singapore’s crypto industry, especially for small and medium-sized firms and Web3 projects.
The high cost of compliance and technical requirements for licensing make it difficult for many startups to survive, likely leading to a wave of market exits. Industry insiders estimate that over half of existing crypto projects may leave the Singapore market.
Emerging sectors like DeFi, NFTs, and smaller exchanges are particularly vulnerable, as their models are often complex and hard to fully align with regulatory demands.
In response, many companies are looking toward other jurisdictions:
Hong Kong, with its 2023 Virtual Asset Service Provider (VASP) framework, has drawn some Singapore-based firms with relatively flexible rules.
Dubai, with low tax rates and a pro-innovation stance, is also gaining traction.
Tokyo has become attractive to infrastructure-heavy blockchain projects thanks to supportive policies.
This relocation trend could weaken Singapore’s role as a global crypto hub and reshape the competitive landscape of Asia’s crypto industry.
The deeper concern is that the new regulations may stifle blockchain innovation. Web3 projects often thrive in flexible environments and rely on high-risk, high-reward investments.
The strict compliance requirements and high costs may suppress the vitality of startups.
While stricter regulation may improve transparency and attract institutional capital in the long term, in the short term, the resulting market shakeout will significantly impact Singapore’s crypto ecosystem.
GLOBAL RIPPLE EFFECTS AND INDUSTRY RESPONSE
As a trendsetter in Asia’s crypto landscape, Singapore’s regulatory shift has global implications. Other countries may follow suit, introducing similar stringent regulations and pushing the global crypto industry toward greater compliance.
On the flip side, this could also lead to capital and talent flight to more lenient regions such as Dubai, the Cayman Islands, or Switzerland, forming new industry centers.
For crypto businesses and professionals based in Singapore, adapting to the DTSP Guidelines is critical. Some companies may choose to invest in compliance—applying for licenses, improving AML/CFT protocols, bolstering security, and deepening local operations.
Others, especially smaller firms unable to afford compliance, may seek partnerships with licensed entities or relocate.
The partial exemptions for utility and governance token projects may offer a breather for some Web3 ventures, allowing them to focus on compliant product models.
However, relocation is not a simple “move”—it involves a careful evaluation of regulatory environments, tax regimes, and long-term development potential in target jurisdictions to ensure sustainability.
OUTLOOK: BALANCING COMPLIANCE AND INNOVATION
Singapore’s regulatory tightening marks a transformation from “Asia’s crypto haven” to a “compliant financial center.”
Though this shift may result in short-term project losses and industry disruptions, in the long run, it may help build a healthier, more trustworthy ecosystem and attract institutional capital.
However, Singapore must strike a balance between compliance and innovation. Overly rigid regulation could sap innovation, weakening the country’s global blockchain competitiveness.
MAS may need to adjust policies based on industry feedback, such as offering more flexible paths for startups or extending compliance grace periods to maintain Singapore’s innovation appeal.
Meanwhile, global crypto competition is intensifying. Hong Kong, Dubai, and Switzerland are actively courting crypto enterprises with friendlier policies.
Singapore’s position is under challenge. The ability to preserve financial stability while nurturing innovation will be key to the future of its crypto industry.
CONCLUSION: THE BEGINNING OF A NEW CHAPTER
The DTSP Guidelines released in late May 2025 mark a turning point in Singapore’s crypto regulatory history. They bring the “regulatory arbitrage” era to an end and open a new era focused on compliance.
This policy not only reshapes Singapore’s crypto ecosystem but also serves as a valuable reference for global regulatory frameworks.
For businesses and professionals, the challenge lies in adapting to the new rules, while balancing innovation and compliance.
In a rapidly evolving landscape, only those who respond flexibly and adjust proactively will be able to survive and thrive in the next wave of regulatory transformation.
〈Singapore Tightens Cryptocurrency Regulations〉這篇文章最早發佈於《CoinRank》。
