Credit: CFP
AsianFin — Singapore is no longer a haven for crytpo companies after the city state closed one of the global crypto industry’s favored regulatory loopholes.
On May 30, the Monetary Authority of Singapore (MAS) issued its final policy guidelines for Digital Token Service Providers (DTSPs), demanding that all crypto firms operating in or from Singapore terminate services to overseas clients by June 30, 2025, unless they obtain a DTSP license.
The rule, which offers no grace period, marks one of the southeastern Asian country’s sharpest regulatory and threatens to trigger a mass exodus of Web3 companies from the region.
Violators could face fines of up to S$250,000 (US$185,000) and three years in prison. The regulatory zero-tolerance tone marks a striking departure from Singapore’s previous positioning as a harbor for crypto entrepreneurs seeking regulatory arbitrage amid global crackdowns on money laundering and financing for terrorist activities.
“The party’s over,” said Adam, a Web3 project operator who requested anonymity. “We used to think we could stay in Singapore and serve only overseas markets — that window just closed.”
For years, Singapore thrived as a regional crypto base, especially after China’s sweeping ban in 2021 and the U.S. Securities and Exchange Commission’s strengthened enforcement. By 2023, crypto-related companies in Singapore accounted for nearly a quarter of the Asian market. The MAS had maintained a bifurcated regulatory model, tightening rules for domestic-facing platforms while giving leeway to firms targeting offshore markets.
However, the booming of the crypto sector in Singapore came with unprecedented risks. In 2024, crypto scams surged in Singapore, resulting in a quarter of the nation’s total scam losses.
The new DTSP regime marks an overhaul of Singapore’s crypto regulatory framework. According to the MAS, all digital asset activities conducted “from any location in Singapore”, including temporary or mobile setups, now fall under licensing requirements, regardless of where clients are based.
The broad definition of “business premises” and “persons” means that both individuals and companies, even those conducting remote work or offering custodial services from home, are included in the regulatory net.
This sweeping coverage has unsettled crypto players. “People are panicking,” said Kevin, an employee at a crypto exchange preparing to relocate its Singapore office to Hong Kong. “I was applying for permanent residency here. Now, I’m rethinking everything.”
Exodus From Global Crypto Hub
The sudden regulatory pivot comes after a years-long buildup. MAS first introduced the Financial Services and Markets Act in 2022, which laid the groundwork for the DTSP licensing regime. Both the FTX collapse and the implosion of Singapore-based hedge fund Three Arrows Capital in 2022 also prompted soul-searching within the government. Lawrence Wang, the then Finance Minister and now Prime Minister, admitted that Temasek’s investments in FTX had damaged the country’s reputation.
The MAS says the new rules are aimed at protecting Singapore’s image. “What DTSPs pose to Singapore would be reputational risk,” the authority wrote on official statement, citing money laundering and terrorism financing risks given the borderless nature of crypto.
· But the move could weaken Singapore’s prominence as Asia’s crypto capital. Already, companies are eyeing exits.
Hong Kong, with its 2023 Virtual Asset Service Provider (VASP) framework, has lured some Singapore-based firms with its flexible rules. The United Arab Emirates, with low tax rates and a pro-innovation approach, is also gaining traction. Japan appeals to infrastructure-heavy blockchain companies thanks to its supportive policies.
Hong Kong lawmaker Duncan Chiu took to social media to openly invite Singapore-based firms to relocate. “If you are currently engaged in virtual asset business in Singapore and wish to move your headquarters to Hong Kong, I am happy to assist,” he wrote.
Other jurisdictions like Dubai, a metropolitan city of UAE and Malaysia are also likely destinations.. “Singapore is expensive and boring,” Adam quipped. “If you want to live, go to Japan. If you want to make money, go to Dubai.”
Still, not all are panicking. Cobo COO Lily Zhang, a former general counsel at PAG, said the new rules primarily affect unlicensed firms. “For licensed and exempted entities, this creates a fairer playing field and strengthens reputational value,” she said.
According to MAS records, 24 firms including Cobo, Antalpha, and Matrixport are operating under exemptions. Another 33 companies, including Coinbase, Circle, BitGo, OKX SG, and HashKey, have already secured full DTSP licenses.
For these firms, the new regime may serve as a moat, cementing their position as regulatory-compliant leaders in a maturing market. But for many others, Singapore’s once-inviting crypto landscape now looks like a closed chapter.
“Singapore was once the Jerusalem for crypto Jews,” said Adam. “Now, it’s time to move on and wander again.”
