Singapore has introduced a stringent digital token regulatory framework that is transforming its crypto landscape. According to a Wu Blockchain report, on June 30, 2025, the Monetary Authority of Singapore (MAS) will officially enforce new rules for Digital Token Service Providers (DTSPs).
This regulation marks the end of a multi-year policy development process that began in 2022. It targets both local and overseas-facing firms operating from Singapore. It includes all Singapore-incorporated entities and any individual or organization with a business presence in the country.
MAS Clarifies Scope and Enforcement Rules Under the DTSP Regime
The Financial Services and Markets Act (FSMA), passed in April 2022, serves as the foundation of the new regime. Section 137 of the FSMA outlines that both individuals and companies are subject to licensing if they operate digital token services from Singapore. This includes firms incorporated in Singapore that serve only foreign clients. MAS has removed the distinction between local and overseas users, applying regulations equally across the board.
Under the new law, the term “digital token services” includes a wide range of crypto-related activities, from token issuance and custody to trading, brokerage, and payment services. It also covers validation services like staking or node participation and technical support roles related to custody infrastructure. According to MAS, no digital token activity conducted from Singapore will be exempt without proper licensing.
MAS further emphasized that individuals remotely working for overseas crypto projects while residing in Singapore are still subject to the law. Unless they are formal employees of a licensed overseas company, their activities may be considered illegal under the new rules. This interpretation eliminates previously held assumptions that remote work for non-local projects would avoid regulation.
Licensing Demands High Standards and Compliance Readiness
Obtaining a DTSP license under FSMA is not a simple process. MAS has stated it will only issue licenses in exceptional cases. Applicants must demonstrate that their operations are commercially sound and pose no regulatory risk. This includes meeting requirements in all foreign markets where their services are available, a hurdle that disqualifies many early-stage crypto startups.
MAS also requires applicants to have robust corporate governance, experienced personnel, and sufficient capital. The authority does not provide fast-track options or grace periods. Of over 500 applications submitted during an earlier licensing phase, less than 10 percent were approved. As of the end of 2024, only 29 firms had received a license to provide digital payment token services under the Payment Services Act (PSA).
MAS has consolidated the previously fragmented oversight under PSA, SFA, and FAA into one unified framework. This consolidation reduces gray areas and increases operational transparency. With this, the focus is shifting from whether a license is held to how well an operation aligns with compliance requirements. MAS also introduced additional obligations under FSMA, even for firms already licensed under PSA or SFA.
Who is Affected, Who is Not, and What Comes Next?
The immediate impact falls on unlicensed exchanges, wallet providers, NFT marketplaces, and DeFi platforms with operations in Singapore. These include entities that had registered locally but targeted only overseas markets. Without licensing, they must shut down regulated activities by June 30 or face penalties. Individual developers, community managers, and crypto advisors are also affected if their work involves digital token services conducted from within Singapore.
Firms already licensed under PSA or exempted under SFA or FAA are not required to reapply for a DTSP license. However, they must still upgrade their compliance processes to meet FSMA requirements. These include stricter technology risk management, mandatory audits, enhanced anti-money laundering protocols, and immediate reporting of major security breaches. MAS has also banned high-value cash transactions exceeding $20,000.
Consultants offering non-custodial advice or marketing services remain outside the licensing scope, provided they do not handle token issuance or trade execution. The law clearly separates advisory roles from operational services, allowing certain professional services to continue without regulatory burdens. However, any engagement in the distribution or transfer of tokens triggers licensing obligations.
MAS Motivated by Financial Security, Global Alignment, and Local Pressures
The new law reflects Singapore’s long-standing approach of strict licensing across all sectors. The country already requires permits for public performances, food hawking, and even pool operations in hotels. MAS’s treatment of the crypto industry aligns with this national standard of “regulate first, operate later.” The framework aims to protect investors, ensure AML compliance, and maintain financial system integrity.
A key event that shaped the current policy was the 2023 S$3 billion money laundering scandal involving foreign nationals. The “Fujian Gang” case involved large-scale financial crime through corporate structures and bank accounts in Singapore. The incident triggered heightened concern about the misuse of digital token services for illicit capital flows. This prompted MAS to strengthen oversight and eliminate gaps in cross-border crypto activities.
MAS has made clear that Singapore will no longer tolerate regulatory arbitrage. It seeks to safeguard its reputation as a financial center, even at the cost of short-term business outflows. Many early-stage firms may not survive the compliance demands, but MAS is prioritizing regulatory certainty over market size. Projects unable to meet the new standards must consider exit strategies or restructuring.
Tightened Controls in Singapore Shift Industry Focus Toward Other Hubs
With the new regime in place, companies are assessing options outside Singapore. Some firms have already begun relocating to jurisdictions with more flexible licensing structures. Hong Kong has positioned itself as an alternative hub, particularly since its 2022 policy statement welcoming Web3 development. Reports indicate that over 1,000 crypto projects have registered in Hong Kong since then.
Other cities like Dubai, Bangkok, and Kuala Lumpur are also gaining attention. These regions offer varying regulatory approaches, allowing projects to find jurisdictions that better align with their business models. The shift is less about fleeing Singapore and more about matching operational needs with regulatory environments. MAS has made its position clear that compliance is no longer optional.
The implementation of the DTSP licensing framework signals the end of lenient crypto regulation in Singapore. MAS expects entities to meet global standards and contribute to financial stability. For the crypto industry in Asia, the message is direct: regulatory arbitrage is no longer viable. Firms that adapt will stay; those that cannot must move.
