Once a Web3 paradise, Singapore is now starting to drive people away. On May 30, the Monetary Authority of Singapore (MAS) officially released the final policy guidelines for "Digital Token Service Providers (DTSP)," with a very tough stance: all crypto service providers registered or operating in Singapore must cease providing services to overseas customers by June 30, 2025, if they have not obtained a DTSP license.
The regulation has no transition period, and violators will be punished according to law. Companies found to be in violation will face fines up to 250,000 Singapore dollars (200,000 USD) and imprisonment for up to three years. This policy is like a bolt from the blue, causing many Singapore crypto practitioners to tremble.
As the Asian Web3 headquarters, Singapore has long played the role of a "regulatory arbitrage" perfect location. Singapore previously implemented a "separate internal and external" regulatory strategy, allowing companies registered in Singapore to freely provide services to overseas customers, with only stricter regulatory requirements for local market businesses.
Especially when major markets like China implemented comprehensive bans and the US SEC increased enforcement, Singapore timely played the role of a safe haven, providing a safe landing point for numerous crypto trading platforms, funds, and project teams, leading to wave after wave of crypto enterprise migration. Even Singapore's sovereign wealth fund Temasek had previously invested in crypto enterprises like FTX and Immutable, consolidating Singapore's position as the Asian crypto center.
However, this clear regulatory policy is gradually plugging the "regulatory arbitrage" loopholes. According to the DTSP final regulatory response document released by Singapore's MAS, the most stringent key points are:
· Comprehensive Cross-Border Business Management: Whether serving local or overseas customers, any digital token-related business conducted within Singapore requires a DTSP license, directly cutting off the previous regulatory arbitrage path of "registering in Singapore but only serving overseas customers".
· Extremely Broad Definition of Business Premises: MAS defines "business premises" as "any location used by the license holder to conduct business in Singapore", even including movable booths. This definition almost covers all possible business locations, regardless of size.
· Dual Coverage of Individuals and Institutions: Regulatory targets include both individuals or partnerships operating in Singapore's business premises and Singapore companies conducting digital token services overseas, achieving comprehensive subject coverage.
Additionally, while MAS states that overseas company employees working from home can be acceptable, the definition of "employees" is blurry, and whether project founders and shareholders are considered employees is entirely at MAS's discretion.
Why did Singapore's MAS suddenly strike hard? This is not a sudden policy attack on crypto companies. As early as 2022, Singapore's MAS introduced the Financial Services and Markets Act, with Part Nine dedicated to crypto regulation, followed by multiple public consultations and draft reviews. The May 30 document is a response to consultations, while also detailing specific regulatory methods, regulations, notifications, and DTSP licensing guidelines.
According to the consultation document, MAS's core consideration is that "some crypto companies might damage Singapore's reputation".
The original text states, "Due to the internet-based and cross-border nature of digital token services, Digital Token Service Providers (DTSPs) are more likely to face money laundering/terrorist financing (ML/TF) risks... The main risk DTSPs pose to Singapore is reputational risk, that is, potentially damaging Singapore's reputation if they are involved in or misused for illegal purposes."
The origin might trace back to 2022 when Temasek-invested crypto trading platform FTX and local crypto fund Three Arrows Capital collapsed, severely damaging Singapore's financial reputation. Then-Singapore Finance Minister Heng Swee Keat (now Prime Minister) publicly stated that this investment caused reputational damage, and Temasek subsequently reduced the salaries of the investment team and senior management.
Under the latest regulations, which crypto companies will be affected? According to the consultation document, all entities related to crypto asset trading must be licensed, including crypto trading platforms, crypto custody, crypto transfers, crypto issuance... As the deadline of June 30, 2025, approaches, panic from social media circles envelops Singapore crypto practitioners, but confusion is more prevalent.
"I didn't know about the related policies before, and suddenly my friend circle exploded. Currently, opinions vary, and I can only wait and see. At worst, I'll leave Singapore and go to neighboring Malaysia," said project practitioner Adam (pseudonym). A crypto trading platform employee, Kevin, was very melancholic. Their company has already prepared to move their entire office to Hong Kong, but he doesn't know the specific timeline. Having been stationed in Singapore for 2 years and preparing to apply for Singaporean Permanent Residency (PR), he feels regretful and reluctant about this turn of events.
Previously, Hong Kong legislator Wu Jiezhuang posted on social media to recruit Singapore crypto practitioners to settle in Hong Kong, stating: "Singapore recently released the 'Digital Token Service Provider Licensing Guidelines', proposing new policies for companies, institutions, and personnel involved in virtual assets. Since Hong Kong issued the virtual asset declaration in 2022, we have actively welcomed industry development. According to unofficial statistics, over a thousand Web3 companies have already landed in Hong Kong. If you are currently working in the related industry in Singapore and wish to move your headquarters and personnel to Hong Kong, I am willing to provide assistance and welcome you to develop here!"
Lily, COO of crypto custody platform Cobo and former legal counsel of PAG Investment Group, believes the policy's panic has been exaggerated. The policy maintains MAS's consistent regulatory style and primarily affects non-licensed trading platforms' Singapore front-ends and operational teams. It won't impact exempted enterprises like Cobo or licensed companies, nor institutions whose business scope is outside the licensing regulatory range.
According to Singapore MAS's official website, 24 companies including COBO, ANTALPHA, CEFFU, and MATRIXPORT are on the exemption list, while 33 companies like BITGO, CIRCLE, COINBASE, GSR, Hashkey, and OKX SG have obtained DTSP licenses.
For these licensed and exempted enterprises, the new policy actually creates a fairer competitive environment, enhances the reputation value of licensed institutions, and lays the foundation for global expansion. Correspondingly, as the era of regulatory arbitrage ends, some offshore crypto companies based in Singapore have begun migrating to Hong Kong, Dubai, Malaysia, and other locations.
Adam believes crypto practitioners leaving Singapore is a major trend, and this policy merely accelerates the process. "Singapore is expensive, boring, and more importantly, there are few money-making opportunities now. I want to live in Japan and make money in Dubai." Once called the "Jerusalem of Crypto Jews", Singapore's doors are now tightening, and crypto Jews must continue to migrate in search of greener pastures.
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