Author: Spinach Spinach Talks About Web3
The Monetary Authority of Singapore (MAS) released a response document on the new regulations for digital token service providers (DTSP) on May 30, 2025. Many people have not yet realized that this will actually affect the entire Asian Web3 industry landscape.
The Monetary Authority of Singapore (MAS) released a response document on the new regulations for digital token service providers (DTSP) on May 30, 2025. Many people have not yet realized that this will actually affect the entire Asian Web3 industry landscape.
The new rules will be officially implemented on June 30, 2025, and MAS has made it clear that there will be no buffer period! A large-scale "Singapore Web3 retreat" may have quietly begun.
"We will be extremely cautious." When MAS expressed this attitude unabashedly in this harshly worded consultation document, Singapore, once hailed by global Web3 practitioners as "Asia's crypto-friendly paradise," is bidding farewell to the past in an unexpected way - not a gradual policy adjustment, but an almost "cliff-like" tightening of regulations.
For those project owners and institutions that are still on the sidelines, this may no longer be a question of "whether to leave", but a decision of "when to leave" and "where to go".
The good old days: The golden age of regulatory arbitrage
Remember Singapore in 2021? When China banned cryptocurrency trading and the US SEC was wielding the regulatory stick, this small island country welcomed Web3 entrepreneurs with open arms. Three Arrows Capital, Alameda Research, FTX Asia Headquarters... these well-known names chose to settle here, not only because of the 0% capital gains tax, but also because of the "embracing innovation" attitude shown by MAS at that time.
At that time, Singapore was known as the "holy land of regulatory arbitrage" in the Web3 industry. Registering a company here would allow one to legally and compliantly provide digital asset services to global users outside of Singapore, while enjoying the reputation of Singapore as a financial center. This business model of "being in Singapore, but caring about the world" once attracted countless Web3 practitioners.
Now, Singapore’s new DTSP regulations mean that Singapore has completely closed the door to regulatory friendliness. Its attitude can be simply stated in one sentence: all those without licenses in the Web3 industry will be kicked out of Singapore.
What is DTSP? A definition that makes people "think carefully"
DTSP stands for Digital Token Service Provider. According to the definition in Section 137 of the FSM Act and the content of Document 3.10, DTSP includes two types of entities:
1. An individual or partnership operating a place of business in Singapore;
2. A Singapore company carrying on digital token services business outside Singapore (whether the company is in Singapore or elsewhere)
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This definition may seem simple, but it actually contains hidden dangers.
First, what is the definition of "business premises" in Singapore? MAS defines "business premises" as "any place in Singapore used by the licensee for carrying on business (including a stall that can be moved from one place to another)".
Note a few key points in this definition:
"Anywhere": No restrictions, must be a formal business location
"Including stalls": Even mobile stalls are included, showing the wide scope of supervision
"For the purpose of conducting business": The key is whether business activities are carried out at the location
Simply put, as long as you are not licensed in Singapore, you will be at risk of violating the law if you conduct any business involving digital assets in any place, regardless of whether you are a local company in Singapore or an overseas company, and whether you are targeting local or overseas customers.
So is it illegal to work from home?
In response to this issue, Baker McKenzie submitted feedback to MAS in the document
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Baker McKenzie law firm sought clarification from MAS on this issue:
"Given the prevalence of remote working, is MAS's policy intention to cover individuals who are employed by overseas entities but work from their homes or residential premises in Singapore?"
The law firm's concerns are very real. They listed several possible scenarios:
Individuals who provide DT services to overseas companies from home (may be of a consultancy nature)
An employee or director of an overseas company working in Singapore under a remote working arrangement
But at the same time, law firms are also trying to provide some "amulets" for those working from home:
"Based on the current drafting of the legislation, it could be argued that home or residential premises should not be included as they are not generally understood to be the premises from which the licensee carries on business."
However, MAS poured cold water on this issue:
“Under section 137(1) of the FSMA, every person who carries on a business of providing digital token services to persons outside Singapore from a place of business in Singapore is required to obtain a DTSP licence unless the person falls within a class of persons specified in section 137(5) of the FSMA. In this regard, if an individual is located in Singapore and carries on a business of providing digital token services to persons outside Singapore (i.e. individuals and non-individuals), the individual is required to apply for a licence under section 137(1) of the FSMA. However, if the individual is an employee of a foreign-incorporated company that provides digital token services to persons outside Singapore, the work performed by the individual as part of his/her employment with the foreign-incorporated company will not in itself trigger the licensing requirement under section 137(1) of the FSMA.”
as well as
"However, if these individuals work in a shared office space or at an affiliated corporate office of an overseas entity, then they are clearly more likely to be included in the scope."
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To sum up the new regulations:
Without a license, no individual or company can conduct business with local or overseas customers in any business premises in Singapore.
If you are an employee of an overseas worker, working from home is acceptable
But there are also many ambiguities in the new regulations:
MAS has a very vague definition of employees. Is the project founder considered an employee? Is the stockholder considered an employee? MAS has the final say.
If you are a BD or salesperson of an overseas company and you go to someone else's shared office to discuss business, does that count as conducting business at a business location? MAS has the final say
The vague definition of digital token services may also affect KOLs?
MAS’s definition of digital token services is incredibly broad, covering almost all relevant token types and services. Even publishing research reports is included?
According to item (j) of the First Schedule to the FSM Act, the scope of supervision includes:
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"Any service related to the sale or offer of digital tokens, including: (1) providing advice related to digital tokens, either directly or through publications, articles, or any other form (electronic, print or other), or (2) providing advice related to digital tokens through the publication or dissemination of research analyses or research reports (electronic, print or other form)"
This may mean that if you, as a KOL or institution, publish a report analyzing the investment value of a certain token in Singapore, you may theoretically need a DTSP license, otherwise it may be deemed illegal.
In its feedback, the Blockchain Association of Singapore asked MAS a soul-searching question on this issue:
"Will traditional research reports be considered relevant to a token sale or offer? How should participants distinguish research reports related to a token sale or offer?"
MAS did not give a clear answer, and this ambiguity can be said to have made all content creators tread on thin ice.
Which groups may be affected?
Personal identity type (high risk)
Independent practitioners: including developers, project consultants, market makers, miners, etc.
Content creators and KOLs: including analysts, KOLs, community operators, etc.
Core project personnel: including founders, BD, sales and other core business personnel
Institution Type (High Risk)
Unlicensed exchanges: CEX, DEX
Project parties : DeFi, wallets, NFT, etc.
Conclusion: The end of regulatory arbitrage in Singapore
A terrifying reality emerges: Singapore is serious this time, and will "expel" all non-compliant people. In Singapore, almost any activity related to digital tokens may be brought under regulatory scope as long as it is non-compliant. Whether you are in a luxury office building or on the sofa at home, whether you are the CEO of a large company or a freelancer, as long as it involves digital token services.
Since there are a lot of grey areas and ambiguities in the definitions of "business premises" and "carrying on business", MAS is likely to adopt a "case-based" enforcement strategy - killing a few chickens first and then scare the monkeys.
Want to embrace compliance at the last minute? Sorry, MAS has made it clear that it will approve DTSP licenses in an "extremely cautious" manner and will only approve applications in "extremely limited circumstances."
In Singapore, the era of regulatory arbitrage is officially over, and the era of big fish eating small fish has arrived
