Summary
Singapore has long been recognized as a leading global hub for cryptocurrency and blockchain innovation. Its progressive regulatory stance has attracted numerous Crypto and fintech companies, fostering a vibrant ecosystem. However, with rapid advancements in the digital asset space, regulatory frameworks must evolve to ensure stability, protect consumers, and combat illicit activities. A significant change is on the horizon that will impact all Singapore-based crypto firms offering services overseas: Effective June 30, 2025, such entities must be licensed under the Financial Services and Markets Act 2022 (FSMA).
This new requirement marks a pivotal moment for the industry, closing a previous regulatory gap. Previously, some firms operating out of Singapore but serving only foreign customers might have bypassed certain domestic regulations. The Monetary Authority of Singapore (MAS) has now made it clear that any Singapore-incorporated or operating entity providing Digital Token Service Providers (DTSPs) services abroad will fall under the purview of the FSMA. This includes, but is not limited to, crypto wallets, decentralized finance (DeFi) front-ends, and exchanges targeting users beyond Singapore's borders.
The FSMA framework for DTSPs supplements the existing Payment Services Act (PSA), which already regulates various payment services, including those involving digital payment tokens within Singapore. The new FSMA requirements for overseas services emphasize stringent measures, particularly in areas like Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT), technology risk management, and consumer protection.
What the FSMA Means for Your Crypto/Fintech Business
If your Singapore-based cryptocurrency or fintech company provides services to overseas clients, this deadline is critical. The MAS has stated there will be no transitional period or exemptions, and non-compliance can lead to severe penalties, including substantial fines (up to S$250,000) and imprisonment for up to three years.
Key aspects of the new FSMA licensing regime for DTSPs include:
- Licensing Requirement: All Singapore-based firms providing digital token services outside Singapore must obtain a license under Part 9 of the FSMA.
- High Barriers to Entry: The MAS is taking a stringent approach to DTSP licensing, with approvals expected only in rare and exceptional cases. Applicants must demonstrate robust compliance with international AML/CFT standards and prove proper regulation in all jurisdictions where they operate.
- Capital and Fees: A minimum base capital of S$250,000 and an annual license fee of S$10,000 will apply.
- Operational Requirements: Licensees must appoint a Singapore-based compliance officer, adhere to rigorous audit and reporting requirements, maintain robust IT systems, and report major incidents to the MAS within one hour.
- Consumer Protection: New rules also focus on protecting retail investors, including mandates for customer asset segregation, daily reconciliation, and independent custody for digital assets.
This expanded oversight demonstrates Singapore's commitment to maintaining a robust and trusted financial sector, even as it embraces innovation. For your fintech firm, this means a heightened need for a comprehensive understanding of the regulatory landscape and meticulous compliance.
MAS Clarifies Regulatory Regime for Digital Token Service Providers
On 6 June 2025, the Monetary Authority of Singapore (MAS) today clarified the applicable scope for its Digital Token Service Providers (DTSPs) regime (article can be found here).
From 30 June 2025, DTSPs providing services solely to customers outside of Singapore relating to digital payment tokens and tokens of capital market products will need to be licensed. MAS has set the bar high for licensing and will generally not issue a licence. The money laundering risks are higher in such business models and if their substantive regulated activity is outside of Singapore, MAS is unable to effectively supervise such persons. Without a licence, such DTSPs will have to cease their regulated activities.
Providers of services for digital payment tokens or tokens of capital market products that serve customers in Singapore are already subject to regulation and there is no change to what the licensed providers can do. Such providers which serve customers in Singapore may also provide services to customers outside of Singapore.
Providers of services in relation to other tokens, such as those only used as utility and governance tokens, are not subject to licensing or regulation under the new regime, and hence are not impacted.
Due to the higher risks presented by the specific circumstances set out above, existing DTSPs serving only customers outside of Singapore will be required to cease this activity when the regime comes into effect on 30 June 2025.
How Triangle Legal LLC Can Help Your Firm Navigate These Changes
The complexities of the new FSMA requirements necessitate expert legal guidance. This is where Triangle Legal LLC, a dedicated team of corporate lawyers with deep understanding of the Fintech and Crypto space who shares your passion, becomes an invaluable partner. We understand the intricacies of Singapore's financial regulatory framework and the unique challenges faced by Digital Token Service Providers and Crypto / Fintech Companies.
Our services are tailored to help your business achieve full compliance and ensure a smooth transition:
- Regulatory Advisory & Gap Analysis: We provide in-depth legal opinions on the applicability of the FSMA to your specific overseas digital token services, identifying any gaps in your current compliance framework.
- License Application & Strategy: Our fintech lawyer experts will guide you through the entire licensing application process, from preparing comprehensive documentation and robust business plans to liaising with the MAS. We'll help you articulate why your firm merits a license, even under the stringent new criteria.
- Compliance Framework Development: We assist in developing and implementing robust AML/CFT protocols, internal controls, technology risk management frameworks, and customer asset safeguarding measures in line with MAS requirements.
- Legal Documentation Review & Drafting: Our technology lawyer team can review and draft all necessary legal documentation, including terms and conditions, whitepapers, and operational policies, ensuring they meet the evolving regulatory standards.
- Corporate Structuring: We advise on optimal corporate structures to align with regulatory requirements and business objectives, mitigating potential liabilities.
- Ongoing Compliance Support: Beyond initial licensing, we offer continuous advisory services to help your firm stay abreast of regulatory changes and maintain ongoing compliance.
The June 30, 2025, deadline is rapidly approaching. Proactive engagement with legal experts is crucial to ensure your business operations remain uninterrupted and compliant. Don't risk significant penalties and reputational damage.
Frequently Asked Questions (FAQs)
Q1: What is the primary change for Singapore-based crypto firms from June 30, 2025?
A1: From June 30, 2025, all Singapore-based crypto firms that provide digital token services to overseas clients must be licensed under the Financial Services and Markets Act 2022 (FSMA), specifically under Part 9 for Digital Token Service Providers (DTSPs).
Q2: How does the FSMA differ from the Payment Services Act (PSA) regarding crypto firms?
A2: The PSA primarily regulates payment services, including those involving digital payment tokens, within Singapore. The FSMA, on the other hand, extends MAS's regulatory reach to Singapore-based firms offering digital token services outside Singapore, ensuring that these cross-border activities are also subject to robust oversight, particularly concerning AML/CFT and consumer protection.
Q3: What are the consequences of non-compliance with the new FSMA licensing requirements?
A3: Failure to comply with the FSMA licensing requirements by the June 30, 2025 deadline can result in severe penalties, including fines of up to S$250,000 and imprisonment for up to three years. The MAS has indicated no grace period or exemptions.
Q4: Does this new regulation apply to all crypto firms, including DeFi projects?
A4: Yes, if a Singapore-registered entity operates a DeFi frontend, wallet, or any service that facilitates access to digital tokens or generates revenue from them, and serves overseas clients, it will likely fall under the FSMA's purview and require a license. As part of your immediate Compliance review you should assess if your DeFi frontend or wallet service qualifies as a DTSP
Q5: What specific requirements are imposed on Digital Token Service Providers (DTSPs) under the FSMA?
A5: DTSPs will face requirements such as maintaining a minimum base capital of S$250,000, paying an annual license fee of S$10,000, appointing a Singapore-based compliance officer, adhering to strict AML/CFT protocols, implementing robust technology risk management, and reporting incidents promptly to the MAS. Customer asset segregation and independent custody are also key.
Q5: I run a local crypto/fintech business, how can I get a license
A6: Do contact us for more details so that we can understand your requirements. A brief guide on SPI/MPI license under the Payment Services Act (PSA 2019) can be found here.
