What does the new DTSP rules mean for the industry?

Singapore has introduced a strict digital token regulation framework that is changing the crypto landscape. According to WU Blockchain ReportJune 30, 2025, Singapore’s Financial Authorities (MAS) will officially implement new rules for Digital Token Service Providers (DTSP).

The regulations mark the end of the multi-year policy development process that began in 2022. It covers both local and international businesses operating in Singapore. This includes all Singapore-embedded entities and individuals or organizations with a business presence within the country.

MAS clarifies scope and enforcement rules under the DTSP regime

The Financial Services and Markets Act (FSMA), passed in April 2022, will serve as the foundation for the new administration. Section 137 of the FSMA outlines that if you operate a digital token service from Singapore, both individuals and businesses are eligible for licenses. This includes companies established in Singapore that only serve foreign clients. MAS removes the distinction between local and international users and fully enforces regulations.

Under the new law, the term “digital token service” includes a wide range of crypto-related activities, from token issuance and storage to trading, brokerages and payment services. It also covers verification services such as staking and node participation and technical support roles related to custody infrastructure. According to MAS, digital token activities carried out from Singapore will not be exempt without an appropriate license.

MAS further emphasized that individuals working remotely in overseas crypto projects while residing in Singapore are still subject to the law. Unless they are official employees of a licensed foreign company, their activities may be deemed illegal under new rules. This interpretation excludes previously held assumptions that remote work in non-local projects avoid restrictions.

Licenses require high standards and compliance preparation

Obtaining a DTSP license under FSMA is not a simple process. MAS says it will issue licenses only in exceptional cases. Applicants must demonstrate that their operations are commercially sound and do not pose regulatory risks. This includes meeting requirements in all foreign markets where the service is available, as well as hurdles that disqualify many early stage crypto startups.

MAS also requires applicants to have robust corporate governance, experienced personnel, and adequate capital. Authorities do not offer fast truck options or bounty periods. Of the over 500 applications submitted during the previous licensing stage, less than 10% were approved. As of the end of 2024, only 29 companies have received a license to provide digital payment token services under the Payment Services Act (PSA).

MAS integrated previously fragmented monitoring based on PSA, SFA, and FAA into one unified framework. This integration reduces gray areas and provides greater operational transparency. This shifts the focus from whether the license is maintained to how well the operation is consistent with compliance requirements. MAS has also introduced additional obligations under the FSMA, even for businesses already authorized under the PSA or SFA.

Who is affected, who isn’t, and what is coming?

The immediate impact lies in unlicensed exchanges with operations in Singapore, wallet providers, NFT marketplaces and debt platforms. These include entities that were registered locally but targeted only overseas markets. Without a license, you will have to cease regulated activities by June 30th or face penalties. Individual developers, community managers, and cryptographic advisors are also affected if they are involved in digital token services implemented from within Singapore.

Companies already authorized under the PSA or exempt under the SFA or FAA do not need to reapply for their DTSP license. However, you will need to upgrade your compliance process to meet your FSMA requirements. These include stricter technology risk management, forced audits, enhanced money laundering protocols, and immediate reporting of major security breaches. MAS also bans high-value cash transactions of over $20,000.

Unless you handle the issuance of tokens or the execution of trade, consultants providing non-lawful advice or marketing services will remain outside the licence scope. The law clearly separates the role of advisory from operational services, allowing certain professional services to continue without regulatory burdens. However, involvement in the distribution or transfer of tokens triggers a license obligation.

MAS motivated by financial security, global cooperation and local pressures

The new law reflects a long-standing approach to Singapore’s strict licensing across all sectors. The country already requires permission to perform public performances, food hawking, and even run pools in hotels. The treatment of MAS in the crypto industry is consistent with this national standard of “regulating first and working later.” The framework aims to protect investors, ensure AML compliance and maintain the integrity of the financial system.

A key event that shaped current policy was the 2023 $3 billion money laundering scandal involving foreigners. The “Gangs in Fujian” incident involved massive financial crimes through Singapore’s corporate structure and bank accounts. The incident sparked growing concern over the misuse of illegal capital-stream digital token services. This has led MAS to step up surveillance and eliminate gaps in cross-border crypto activity.

MAS has made it clear that Singapore will no longer tolerate regulatory rulings. At the expense of short-term business outflows, they are trying to protect their reputation as a financial centre. While many early stage companies may not be able to withstand compliance demands, MAS prioritizes regulatory certainty over market size. Projects that are unable to meet the new criteria should consider exit strategies or restructuring.

Strict Control in Singapore focuses on industry shift industry focus on other hubs

With the new structure in place, companies are evaluating options outside of Singapore. Some companies are already beginning to move to jurisdictions with more flexible licensing structures. Hong Kong has positioned itself as an alternative hub, especially since the 2022 policy statement welcomed Web3 development. According to the report, more than 1,000 cryptographic projects have been registered in Hong Kong since then.

Other cities such as Dubai, Bangkok and Kuala Lumpur are also attracting attention. These regions offer a variety of regulatory approaches, allowing projects to find business models and better suited jurisdictions. The change in fleeing Singapore is about matching the regulatory environment with operational needs. MAS made it clear to its position that compliance is no longer an option.

The implementation of the DTSP licensing framework indicates the end of Singapore’s generous cryptographic regulations. MAS expects the entities to meet global standards and contribute to financial stability. For the Asian crypto industry, the message is direct. Regulatory rulings are no longer feasible. There will be few companies that will adapt. Things that can’t do have to move.