Once a Safe Haven, Now a Regulatory Frontline
Since the Chinese mainland began tightening regulations on cryptocurrency trading and ICO-related activities in 2017, and further escalated the crackdown on mining and domestic trading platforms in 2021, a large number of crypto projects and companies have been forced to relocate overseas. As a new financial technology hub in Asia, Singapore has quickly become a "safe haven" for the crypto industry, attracting many companies that originally operated in mainland China, including exchanges, fund management companies, and infrastructure projects, thanks to its clear legal framework, open market access mechanisms, and lower regulatory friction.
For instance, in terms of regulation, Singapore implemented the Payment Services Act (PSA) in 2019, which provided a clear compliance path for crypto asset-related businesses, covering various types of services such as digital payment token services, electronic money issuance, and cross-border remittances.
However, as global attention to the risks of the crypto industry has intensified, and following the FTX collapse at the end of 2022, which caused significant economic and reputational losses for one of Singapore's sovereign wealth funds, Temasek Holdings, the country's regulatory stance towards the crypto industry has quietly begun to change.
In the second half of 2024, the Monetary Authority of Singapore (MAS) first issued new regulations requiring licensed platforms to completely segregate and custody user assets, and prohibited them from providing token collateral services to retail investors. Last week, it formally ordered all local cryptocurrency companies without a Digital Token Service Provider (DTSP) license to cease providing digital token services to overseas customers by June 30 of this year.
Compliance or Exit: New Regulations Enforced Immediately, Violations Will Face Heavy Penalties
The new directive issued by MAS last week is effective under Section 137 of the Financial Services and Markets Act (FSM Act) and explicitly states that no transition period or buffer arrangements will be set. If companies wish to continue overseas operations, they must obtain a formal DTSP license issued by MAS or possess other relevant licenses (such as those under the Payment Services Act, Securities and Futures Act, or Financial Advisers Act). Non-compliance by the deadline will result in fines of up to SGD 250,000 and potential imprisonment for up to three years.
MAS stated that this move aims to close regulatory loopholes and prevent some companies from setting up "shell companies" in Singapore to gain a legal facade while providing cryptocurrency services to overseas clients, thereby evading regulations in their home countries or internationally. This policy also aligns with the global trend of strengthening anti-money laundering (AML) and counter-terrorism financing (CFT) measures.
Shift in Singapore's Policy: Hong Kong, Japan, and Dubai Become New Crypto Capital Magnet
Historically, Singapore, Japan, and Hong Kong have been in a subtle competition for the title of Asia's crypto financial center. Additionally, Dubai has been actively creating a globally crypto and blockchain-friendly environment in recent years, gradually becoming a crypto financial hub connecting the Middle East, Europe, and Asia. Now, Singapore's latest regulatory "stick" has undoubtedly disrupted the balance of this "silent war."
In Hong Kong, regulators have gradually opened up the Virtual Asset Trading Platform (VATP) licensing system since 2023, allowing compliant platforms to provide services to retail investors under a regulated framework, promoting the slogan of "regulated innovation." Although the overall compliance path is relatively strict, its clear policy direction and friendly attitude towards institutional funds are attracting some Web3 teams from Southeast Asia to return.
After the new regulations were announced in Singapore, Hong Kong legislator Wu Jiezhuang even directly posted on social media platform X, "If you are currently engaged in related industries in Singapore and intend to relocate your headquarters and personnel to Hong Kong, I am willing to provide assistance. Welcome to develop in Hong Kong!"
In Japan, the Financial Services Agency (FSA) continues to maintain a cautious yet open regulatory policy towards crypto assets, promoting stablecoin legislation and tax reform. Recently, members of the ruling Liberal Democratic Party have also called for a reduction in the corporate tax rate on crypto assets to support local startups and attract global crypto projects to establish themselves in Japan. Compared to Singapore's "no transition period" hardline measures, Japan's regulatory transition and market inclusivity may become a new choice for projects seeking policy stability.
Dubai continues to strengthen its status as a "crypto oasis," with a compliance framework led by the Virtual Assets Regulatory Authority (VARA) that is flexible and forward-looking, attracting numerous exchanges, wallet service providers, and DeFi protocols to register locally. The region not only welcomes international crypto companies to establish regional headquarters but is also actively promoting alignment with international standards (such as FATF), balancing compliance with market vitality.
Strict Regulation Promotes Compliance: Singapore's Crypto Industry Enters a Centralized Era
According to information from the MAS website, 24 companies, including COBO, ANTALPHA, CEFFU, and MATRIXPORT, are on the exemption list, while 33 companies, including BITGO, CIRCLE, COINBASE, GSR, Hashkey, and OKX SG, have already obtained DTSP licenses.
The introduction of the new regulations undoubtedly intensifies the market reshuffling effect. Industry insiders believe that this policy will increase industry concentration in the short term, giving "stronger" companies with resources and compliance capabilities a competitive advantage.
Firstly, the high compliance threshold means that only large exchanges and service providers with substantial funding and standardized management can successfully obtain licenses. Compared to small and medium-sized or startup companies, these leading firms are better equipped to bear compliance costs and complex regulatory requirements, allowing them to continue expanding their business in the market.
Additionally, licensed companies gain significant improvements in brand trust and international reputation, which are crucial for attracting investment and expanding cross-border business. In the context of tightening regulations, compliance has become a basic threshold for market participants, and competition among companies will increasingly focus on service quality, technological innovation, and compliant operations.
However, despite the clear trend of "the strong getting stronger," the original intention of regulation remains to promote healthy industry development and prevent risks. In the long run, the market, after reshuffling and standardization, will become more mature, and compliant companies are expected to form a more competitive and sustainable ecosystem.
The Individual Struggles Amid Policy Waves: Employees of Crypto Exchanges Experience Silent Struggles
When the winds of policy blow, most people only hear the rustling of leaves; but for individuals, sometimes that wind can turn their lives upside down.
Li Yue (pseudonym) has worked in the technical department of a top 10 exchange for nearly three years and originally planned to prepare materials to apply for permanent residency (PR) soon. However, under the new regulations, his employer may be forced to adjust its business or even withdraw from Singapore, losing its local operating qualifications, which means his employment pass (EP) will not be renewed, and the PR application process will be put on hold.
According to the regulations of the Immigration and Checkpoints Authority (ICA) in Singapore, PR approval typically considers the applicant's job stability, salary level, length of residence, and social contributions. If the employer suddenly exits the market, the applicant may face the risk of material invalidation and qualification reassessment.
"If the company withdraws, I might have to leave, and all my efforts over the past three years would be in vain. You see the news talking about it lightly, like 'strategic adjustments,' 'resource optimization,' 'aligning with compliance trends'… but in fact, behind every word, there are people who have to pack their bags, delay applications, and rethink their next steps."
It is reported that exchanges that have set up offices in Singapore but have not obtained a formal DTSP license have yet to announce specific adjustment plans for employees. In the absence of clear guidance and guarantees internally, many employees, like Li Yue, find themselves in a state of information vacuum, with the future filled with confusion and uncertainty.
Summary
The new regulations did not emerge suddenly but are the culmination of MAS's years of regulatory evolution. For unlicensed local institutions, this is a "hardcore assessment," marking the entry of Singapore's crypto market into a more compliant and institutionalized mature stage. This move also sends a clear signal: while innovation is welcomed, the regulatory framework for international crypto businesses will become stricter, no longer tolerating regulatory arbitrage.
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Original article: “Singapore's Crypto Regulation Tightens: Safe Haven Becomes Regulatory High Ground, Will Exchanges 'Wander the Earth'?”
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