The Monetary Authority of Singapore (MAS) has set a deadline of June 30 for local digital token service providers to cease offering digital token (DT) services to overseas markets.
This directive comes in response to industry feedback on MAS's proposed regulatory framework for digital token service providers (DTSP) under the 2022 Financial Services and Markets Act (FSM Act).
MAS stated that it will not establish transitional arrangements for local DTSPs providing services overseas. The agency noted that any company, individual, or partnership registered in Singapore that provides DT services outside of Singapore must cease operations or obtain a license by the time the DTSP provisions take effect at the end of June.
"DTSPs that are required to be licensed under Section 137 of the FSM Act must suspend or stop conducting DT service business outside of Singapore by June 30, 2025," MAS wrote.
According to Section 137 of the FSM Act, businesses in Singapore are presumed to operate within Singapore, thus requiring licensing. This includes companies whose overseas token-related activities are not their primary business activities.
Companies found in violation of the law will face hefty fines of up to SGD 250,000 (USD 200,000) and imprisonment for up to three years.
MAS stated that only companies that have obtained licenses or exemptions under existing financial laws—such as the Securities and Futures Act, the Financial Advisers Act, or the Payment Services Act—can continue to operate without conflicting with the new regulations.
Although DTSPs can apply for licenses, a lawyer indicated that such cases are rare. Hagen Rooke, a partner at Gibson, Dunn & Crutcher, stated in a LinkedIn post that due to heightened regulatory concerns regarding counter-terrorism financing (CFT) and anti-money laundering (AML), licenses will only be granted in very limited circumstances.
"MAS will only grant licenses under the new framework in extremely limited situations (as this operational model typically raises regulatory concerns, such as AML/CFT-related issues)," Rooke wrote.
The lawyer urged companies to consider taking swift action through operational restructuring to mitigate risks and eliminate their Singapore touchpoints.
This move marks a significant tightening of regulatory oversight by Singapore authorities over cryptocurrency activities. The order for DTSPs to cease overseas activities stems from regulatory developments aimed at addressing risks in the digital asset industry.
In April 2022, Singapore passed the FSM Act, granting MAS greater powers to regulate cryptocurrency companies registered in Singapore but operating overseas.
The law requires DTSPs with overseas operations to comply with AML and CFT standards, even if they do not provide services within Singapore. MAS is concerned that cryptocurrency companies may exploit regulatory loopholes by registering in Singapore while engaging in unregulated activities overseas.
Related: Thailand's SEC to block five cryptocurrency exchanges including Bybit and OKX on June 28
Original article: “Singapore Requires Local Cryptocurrency Companies to Cease Overseas Operations by June 30”
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