Singapore is "killing all" Web3, and the era of regulatory arbitrage is over

Author: Spinach Spinach

The Monetary Authority of Singapore (MAS) released a response document for the new regulations on Digital Token Service Providers (DTSP) on May 30, 2025, and many people have not yet realized that this will actually affect the entire Asian Web3 industry landscape.

The new regulations will officially take effect on June 30, 2025, and MAS has clearly stated that there will be no buffer period! A large-scale "Singapore Web3 Mass Exodus" may have quietly begun.

"We will be extremely cautious." When MAS expressed this attitude without concealment in this stern consultation document, Singapore, once praised by global Web3 practitioners as the "Asian Crypto-Friendly Haven", is saying goodbye to its past in an unexpected way - not through gradual policy adjustments, but through an almost "cliff-like" regulatory tightening.

For those projects and institutions still waiting and watching, this may no longer be a question of "whether to leave" but a choice of "when to leave" and "where to go".

Past Glory: The Golden Age of Regulatory Arbitrage

Remember Singapore in 2021? When China completely banned cryptocurrency trading and the US SEC was wielding its regulatory stick everywhere, this small island nation opened its arms to welcome Web3 entrepreneurs. Three Arrows Capital, Alameda Research, FTX Asia Headquarters... many prominent names chose to settle here, not just 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 a "regulatory arbitrage holy land" for the Web3 industry. Registering a company here meant legally and compliantly providing digital asset services to global users outside Singapore while enjoying the reputation of Singapore's financial center. This business model of "being in Singapore, serving the world" once attracted countless Web3 practitioners.

Now, Singapore's new DTSP regulations mean that Singapore has completely closed the door on regulatory friendliness, and its attitude can be summed up in one sentence: Kick out all Web3 industry players without a license.

What is DTSP? A Definition That Makes One Shudder

DTSP stands for Digital Token Service Provider. According to the definition in Section 137 of the FSM Act and the content in Document 3.10, DTSP includes two types of entities:

I. Individuals or partnerships operating at business premises in Singapore;

II. Singapore companies conducting digital token service business outside Singapore (regardless of whether the company is from Singapore or elsewhere)

[Image]

This definition seems simple but is actually fraught with danger.

First, how does Singapore define "business premises"? MAS defines "business premises" as "any location in Singapore used by the license holder to conduct business (including booths that can move from one location to another)".

Note the key points in this definition:

• "Any location": No restriction on it being a formal commercial premises

• "Including booths": Even mobile booths are included, showing the broad scope of regulation

• "Used to conduct business": The key is whether business activities are conducted at that location

Simply put, if you do not have a license in Singapore, there is a risk of breaking the law when conducting any digital asset-related business at any location, whether you are a local Singapore company or an overseas company, whether targeting local or overseas customers.

Conclusion: The End of Regulatory Arbitrage in Singapore

A terrifying reality emerges: Singapore is serious this time, aiming to "expel" all non-compliant entities, with almost any activity related to digital tokens potentially falling under regulatory scope. Whether you are in a luxurious office or on a sofa at home, whether you are a CEO of a large company or a freelancer, as long as you are involved in digital token services.

Due to the numerous gray areas and ambiguous definitions of "business premises" and "conducting business", MAS is likely to adopt a "case-oriented" enforcement strategy - making an example of a few to warn others.

Hoping to embrace compliance at the last minute? Sorry, MAS has clearly stated that it will review DTSP licenses with "extreme caution", approving applications only 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.