Opportunities and Challenges Coexist, Don't Let New Regulations Scare You Away.
Written by: Mankun
Singapore's Status as a Web3 Paradise Faces New Tests
Singapore, known as the "Web3 Paradise of Asia," has long been the preferred destination for global crypto asset service providers and Web3 entrepreneurs, thanks to its zero capital gains tax and comprehensive legal framework. In October 2024, the Monetary Authority of Singapore (MAS) released a detailed consultation paper on new regulations for digital token services, signaling a tightening of regulatory policies. The response document to the new regulations released by MAS on May 30, 2025, sparked heated discussions in the crypto industry about whether there is a need to "exit" Singapore. So, what should crypto asset service providers operating in Singapore—especially those serving overseas clients—do next?
Core of the New Regulations: Regulatory Upgrade
As early as 2022, Singapore passed the Financial Services and Markets Bill, which established a regulatory framework specifically for digital token services (DTS) in Chapter 9. This framework covers various virtual asset and crypto asset businesses, such as:
Crypto asset and fiat currency exchange
Confidential asset transfer payments
Crypto asset custody services
However, at that time, the Financial Services and Markets Bill did not strictly prohibit Singapore-registered entities from providing services to overseas users. Coupled with tax incentives, many Web3 projects set up in Singapore, extending their services globally. By October 2024, the regulatory framework was further refined, with MAS clearly stating in the consultation paper that entities registered in Singapore, even if providing crypto services to overseas clients, would need a DTSP license. Following the response document released by MAS in May 2025, a more specific timeline emerged: the new regulatory scheme will officially take effect on June 30, 2025. MAS's intention is clear: the days of unregulated growth are over; if you want to stay and play, you must follow the rules.
Why is Singapore Doing This?
One might ask: hasn't Singapore always been friendly to the crypto industry? Why the sudden change? In fact, this is not a "change of face," but a continuation of Singapore's pragmatic style. As one of the first jurisdictions to begin regulating the crypto industry, Singapore's approach avoids a "one-size-fits-all" strategy, initially allowing the industry some space while closely monitoring and developing alongside it, continuously exploring upgrades and iterations of regulatory policies and methods.
In recent years, Singapore's lenient policies have successfully attracted a large number of crypto projects, but they have also brought about side effects:
License Abuse: The DTSP license, originally a compliance pass, has been misused by some institutions, with certain projects using the license to package themselves, attract investment, or cover up non-compliant operations.
Telecom Fraud: Telemarketing scams have long been a blight on the crypto industry. Some criminals, based in Singapore, promote "high-return" crypto products through phone calls or social media, or lure customers into purchasing unknown tokens, promoting fake "custody services," and then absconding with the funds.
Gray and Black Markets and Crime: Some unlicensed crypto asset trading platforms offer "anonymous" services to clients, allowing criminals to engage in money laundering and terrorist financing activities; other crypto projects disguise funds of unknown origin as legitimate earnings, severely disrupting financial order.
These chaotic phenomena not only disrupt the normal development of the crypto industry but also damage the reputation of the industry and Singapore itself. When MAS updated the National Anti-Terrorism Financing Strategy in 2024, it raised the terror financing risk level for DTS service providers from "medium-low" to "medium-high." MAS has recognized the necessity of tightening regulatory policies in light of these phenomena, and thus, the goals of the new regulations are clear:
Eliminate "small and scattered" entities: Increase compliance costs to force "small platforms" that are easily abused by illegal activities to exit the market;
Retain "big players": Encourage well-funded, compliant institutions that can provide safe and stable services to users to remain;
Attract traditional funds: Make banks, funds, and other traditional financial institutions and users feel more secure entering the Web3 space.
In other words, Singapore does not aim to drive away the crypto industry but rather wants it to develop sustainably, rather than becoming a "safe haven" for criminals.
How Significant is the Impact on Industry Entities?
If you are a crypto asset service provider, the impact of the new regulations depends on your business model. It can be categorized into several situations:
Situation 1: Unlicensed institutions operating locally in Singapore, serving overseas clients
For example, if you have established a registered entity in Singapore and employ staff to provide crypto asset exchange services to overseas clients, you must quickly apply for MAS's DTSP license after the new regulations take effect; otherwise, your business will have to cease operations.
Situation 2: Individuals in Singapore providing services remotely to overseas clients
If you are a "digital nomad" working remotely and only serving overseas clients, the situation is slightly more complex.
If you are contracted with an overseas registered entity, MAS's current stance is: if the individual is an employee of a foreign registered company providing services outside Singapore, the work performed as part of their employment with the foreign registered company will not trigger licensing requirements.
If you are acting solely in your personal capacity (e.g., as a KOL, project consultant, etc.), MAS's current stance is: if the individual is located in Singapore and engages in providing digital token services to individuals and non-individuals outside Singapore, that individual will need to apply for a license.
- It is important to note that MAS's regulations for such scenarios are relatively broad, and different cases may yield different determinations.
Situation 3: Entities registered in Singapore but actually operating overseas
If you are merely using a "shell company" in Singapore while your actual business and client base are overseas, the new regulations may have little impact.
However, risks cannot be completely ruled out: MAS may investigate the actual place of operation, and if it finds substantial business activities in Singapore (e.g., a physical office or servers set up), you will still need to hold a DTSP license.
Situation 4: Providing services to local clients in Singapore
This scenario requires no elaboration; regardless of how the new regulations change, providing crypto asset services to Singapore residents has long required a license. The new regulations merely further close the loophole for cross-border services.
Compliance Recommendations: Three Steps to Steady the Ship
In light of the upcoming new regulations, Web3 institutions and practitioners should grasp the key points and take action. Here are three practical recommendations to help you respond to the changes:
- Understand Your Business Fundamentals
First, clarify which category your business model falls into and whether you need a license.
- Prepare for License Applications in Advance
If you decide to continue developing in Singapore, prepare your application for MAS's DTS license as early as possible.
- Consider Migration Options
If compliance costs are too high, consider looking at other locations, such as other Asian countries or even Europe or the Middle East.
Opportunities and Challenges Coexist, Don't Let New Regulations Scare You Away
Singapore's new crypto regulatory regulations may seem to impose a "tightening spell" on the industry, but from another perspective, this is also an opportunity. For large institutions with sufficient strength and budget, compliance may be the necessary path to attract more funds into the crypto market; for relatively smaller institutions and teams, timely adjustments in strategy and finding the right positioning can also lead to successful opportunities for compliant transformation.
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