Singapore’s new cryptocurrency regulation: Where should crypto asset service providers go?

**Singapore's Status as a Web3 Haven Faces New Tests**  

Singapore, hailed as the "Web3 paradise of Asia," has long been the top choice for global crypto asset service providers and Web3 entrepreneurs, thanks to its zero capital gains tax and robust legal framework. In October 2024, the Monetary Authority of Singapore (MAS) released detailed draft proposals for new regulations on digital token services, signaling a tightening of oversight. The MAS’s follow-up response document in May 2025 further sparked heated debate in the crypto industry about whether it’s time to "撤离 (withdraw)" from Singapore. So, what’s the future for crypto asset service providers operating in Singapore—especially those serving overseas clients?  

### Core of the New Regulations: Enhanced Oversight  

As early as 2022, Singapore passed the *Financial Services and Markets Act*, with Chapter 9 establishing a regulatory framework for Digital Token Services (DTS). This framework covers various virtual asset and crypto asset activities, such as:  

- Crypto-fiat currency exchange  

- Crypto asset transfer and payment  

- Crypto asset custody services  

At the time, the *Financial Services and Markets Act* did not strictly restrict Singapore-registered entities from serving overseas users. Coupled with tax incentives, this allowed大量 (numerous) Web3 projects to base themselves in Singapore and expand services globally. However, by October 2024, the regulatory framework was further refined: MAS’s draft proposals explicitly stated that Singapore-registered entities providing crypto services to overseas clients would need a DTSP license. With the May 2025 response to public feedback, a specific timeline emerged: the new regulations would take effect on June 30, 2025. MAS’s message is clear: the era of unbridled growth is over—those who want to stay must play by the rules.  

### Why Is Singapore Doing This?  

You might ask: Hasn’t Singapore always been friendly to the crypto industry? Why the sudden shift? In reality, this is not a "change of heart" but a continuation of Singapore’s pragmatic approach. As one of the first jurisdictions to regulate crypto, Singapore has avoided "one-size-fits-all" policies, instead giving the industry space to grow while closely monitoring and iterating its regulatory framework.  

Over the past few years, while Singapore’s lenient policies successfully attracted many crypto projects, they also had downsides:  

1. **License Abuse**: The DTSP license, intended as a compliance badge, was exploited by some institutions to operate in gray areas. Some project teams used licenses to market themselves, attract investments, or hide non-compliant activities.  

2. **Telecom Fraud**: Scams have long plagued the crypto industry. Fraudsters based in Singapore have used phone calls or social media to promote "high-return" crypto products, lure clients into buying obscure tokens, or sell fake "custody services" before disappearing with funds.  

3. **Growth of Gray and Black Markets**: Unlicensed crypto exchanges offered "anonymous" services, enabling money laundering and terrorist financing. Some projects also disguised unaccounted funds as legitimate revenue, disrupting financial order.  

These乱象 not only hindered the crypto industry’s development but also damaged its reputation and Singapore’s image. In its 2024 update to the *National Strategy for Countering Terrorist Financing*, MAS raised the risk level of terrorist financing by DTS providers from "medium-low" to "medium-high." MAS has recognized the need to tighten regulations, and the new rules aim to:  

1. **Eliminate Small, Disorganized Players**: Higher compliance costs will force out "small platforms" vulnerable to abuse by bad actors.  

2. **Retain Major Players**: Encourage well-capitalized, compliant institutions capable of providing secure and stable services to stay.  

3. **Attract Traditional Capital**: Make it safer for traditional financial institutions (e.g., banks, funds) and users to enter the Web3 space.  

In other words, Singapore is not driving the crypto industry away but seeking its sustainable development—no longer a "safe haven" for criminals.  

### Impact on Industry Entities  

If you’re a crypto asset service provider, the new rules’ impact depends on your business model. Here are four scenarios:  

**Scenario 1: Unlicensed Entity Operating Locally in Singapore, Serving Overseas Clients**  

Example: A Singapore-registered entity with employees providing crypto exchange services to overseas clients. After the新规 (new rules) take effect, they must apply for an MAS DTSP license immediately or cease operations.  

**Scenario 2: Individual in Singapore Working Remotely for Overseas Clients**  

- **Employed by a Foreign-Registered Entity**: If you’re an employee of a foreign-registered company serving overseas clients, MAS currently states that your work as part of that employment does not require a license.  

- **Individual Role (e.g., KOL, Project Advisor)**: If you’re a Singapore-based individual providing digital token services to overseas parties (individuals or entities), you need a license.  

*Note: MAS’s wording for this scenario is broad, and rulings may vary by case.*  

**Scenario 3: Singapore-Registered Entity with Overseas Operations**  

If it’s a "shell company" with no actual business or clients in Singapore, the impact may be minimal. However, risks remain: MAS may investigate actual operations, and entities with physical offices or servers in Singapore will still need a DTSP license.  

**Scenario 4: Serving Local Singaporean Clients**  

This has always required a license, and the new rules merely close loopholes in cross-border services.  

### Compliance Tips: Three Steps to Stay Stable  

Facing the upcoming regulations, Web3 firms and professionals should act strategically. Here are three practical suggestions:  

1. **Assess Your Business Model**: Clarify which scenario your business falls into and whether a license is required.  

2. **Prepare for License Applications Early**: If staying in Singapore, start preparing for the MAS DTS license application as soon as possible.  

3. **Consider Relocation Options**: If compliance costs are too high, explore alternatives in other Asian countries or regions like Europe or the Middle East.  

### Opportunities and Challenges: Don’t Be Scared Off by New Rules  

Singapore’s new crypto regulations may seem like a "tightening noose," but they also present opportunities. For well-resourced institutions, compliance could be a pathway to attracting more capital. Smaller teams can still find转型机会 (transformation opportunities) by adjusting strategies and positioning themselves appropriately.  

**Disclaimer**: The views in this article are solely those of the author and do not constitute investment advice. This platform makes no guarantees regarding the accuracy, completeness, originality, or timeliness of the information and shall not be liable for any losses arising from its use or reliance.