Web3 Landscape in Singapore
In recent months, Singapore has solidified its position as a hub for Web3 entrepreneurs drawn by its favorable regulatory environment. However, a significant shift in regulatory policies could disrupt that status.
New Regulations for Digital Token Service Providers
On May 30, 2025, the Monetary Authority of Singapore (MAS) published a comprehensive regulatory framework targeting Digital Token Service Providers (DTSPs). Effective from June 30, 2025, the new mandates stipulate that:
- All entities engaging in the provision of digital token services must obtain a DTSP license or cease operations entirely.
- This policy comes without any transition phase, dashing the hopes of many Web3 companies previously operating without such licenses.
Under the new regulations, the MAS emphasizes the immediate requirement for all businesses with a presence in Singapore to secure a license by the end of June. Previously, companies targeting clients outside of Singapore had been exempt from such licensing. Companies with local operations or team members must now comply with these strict rules, failing which they face criminal prosecution.
Impact on Companies and Application Challenges
Companies without DTSP licenses—including tech teams supporting decentralized finance projects and cross-chain platforms with operations in Singapore—will be severely impacted. The threshold for obtaining a license is notably stringent; the MAS has declared that such licenses will only be awarded under rare circumstances, providing a preemptive filter against high-risk entities within the financial ecosystem.
For those contemplating application, the barriers are formidable. Candidates must:
- Showcase robust systems to combat money laundering and terrorist financing.
- Implement rigorous internal compliance structures similar to traditional financial institutions.
These measures complicate the pathway for many small to medium-sized Web3 firms.
Remote Workers and Compliance Responsibilities
Moreover, remote workers connected with overseas companies must navigate these regulations carefully. The MAS defines a workplace broadly, which includes home offices; thus, remote employees engaging in digital token services might inadvertently breach the new laws unless exempt under specific employment status conditions.
Customer Due Diligence and Reporting Requirements
The new regulations impose stringent customer due diligence protocols and prompt reporting mandates. DTSP license holders must:
- Report suspicious activities within five working days.
- Flag serious cybersecurity issues within an hour of discovery.
Current Status of DTSP Licenses
As of June 5, 2025, only a select few major firms have secured their DTSP licenses, including well-known entities like Anchorage Digital and Coinbase. MAS’s core rationale for this regulatory overhaul centers on protecting Singapore’s financial reputation. The authority aims to prevent any potential use of local licenses for illicit purposes, ultimately safeguarding its standing as a significant global financial hub.
