Singapore has taken a definitive step ahead in digital asset regulation by way of its Singapore DTSP licensing framework. The Financial Authority of Singapore (MAS) launched its last place on the proposed regulatory regime for Digital Token Service Suppliers (DTSPs), underneath the Monetary Providers and Markets Act 2022, per week in the past.
Efficient 30 June 2025, the brand new Singapore DTSP licensing framework considerably tightens compliance expectations for Singapore-based and Singapore-incorporated entities offering digital token providers. This transfer firmly alerts that Singapore is now not keen to function a base for offshore crypto operators that evade home oversight.
These guidelines additionally apply to people, partnerships, and Singapore-incorporated firms that present digital token providers outdoors Singapore however are based mostly in or registered in Singapore.
Listed here are a very powerful shifts digital token companies want to grasp now.
Why Now? MAS’s Regulatory Calculus
MAS’s resolution to behave decisively now’s grounded in its rising concern over the cash laundering and terrorism financing dangers posed by such operations, particularly so given their cross-border and internet-based natures.
Digital token service suppliers, by design, function throughout borders and infrequently with out the identical checks that apply to conventional monetary companies. This makes them particularly weak to getting used for cash laundering or terrorism financing.
When these companies are arrange in Singapore however serve shoppers elsewhere, any wrongdoing, even when it occurs offshore, can nonetheless injury Singapore’s fame.
By tightening its regulatory perimeter and requiring licenses for even overseas-facing DTSPs, MAS is making it clear: if you happen to’re utilizing Singapore as a base, you’re anticipated to fulfill Singapore’s requirements. The method is measured, however agency.
Even If You Serve Abroad, You Nonetheless Want a Licence
MAS now mandates that any Singapore-based or included entity providing digital token providers to abroad shoppers should safe a DTSP licence. The transfer closes a long-standing regulatory loophole and brings Singapore nearer in step with requirements just like the Monetary Motion Activity Power.
That mentioned, DTSP licences might be granted solely in uncommon circumstances. MAS made clear that candidates will need to have legit financial grounds for not serving the home market. Based on its up to date Singapore DTSP licensing, candidates should additionally show compliance within the jurisdictions the place they function.
No Grace Interval for DTSPs to Comply
MAS has taken a hardline stance: there might be no transitional reduction for unlicensed Digital Token Service Suppliers (DTSPs). All Singapore-incorporated or Singapore-based entities offering digital token providers to abroad shoppers should droop or stop operations by 30 June 2025 except licensed.
This agency place as soon as once more stems from MAS’s considerations over the elevated cash laundering and terrorism financing dangers related to DTSPs.
On account of their internet-based and cross-border nature, these suppliers usually function with little or no connection to Singapore, elevating the stakes for reputational injury if they’re exploited for illicit actions.
As an alternative, a four-week graduation discover is given. It is going to require DTSPs to droop or stop all digital token providers by 30 June 2025.
Excessive Bar for Entry with Flat Capital and Licence Charges
MAS has confirmed that every one DTSPs might be topic to a flat minimal capital requirement of S$250,000 and an annual licence payment of S$10,000. That is no matter firm measurement, enterprise mannequin, or the variety of digital token providers provided.
This uniform construction mirrors the present framework for Digital Cost Token Service Suppliers, the place mounted charges apply throughout the board.
MAS emphasised that these monetary thresholds are meant to make sure that candidates are dedicated to sustaining a significant presence in Singapore and capable of face up to sudden operational or market shocks.
In impact, companies should exhibit they’ve the operational and monetary stability to fulfill the regulatory expectations, particularly in managing expertise and cyber dangers inherent to distributed ledger-based providers.
For smaller companies and early-stage crypto startups, these necessities might current a excessive barrier to entry.
Stricter Guidelines and Pointers on Cash Laundering and CDD
DTSPs should meet new requirements to struggle cash laundering and terrorism financing. This consists of finishing up buyer due diligence (CDD), even on shoppers who have been onboarded earlier than they bought licensed.
MAS shared that it gained’t set a set deadline for this. As an alternative, it can determine timelines case by case and on the level of licensing, relying on every licensee’s buyer danger profile.
Subsequent, companies additionally must be prepared for future modifications to CDD necessities. MAS mentioned that it’ll not specify when licensees should replace preliminary CDD for present clients within the FSM-N27 Discover, as this may largely rely upon the next revisions of CDD necessities relate to.
MAS will, nevertheless, present steering, together with a listing of non-exhaustive issues which licensees ought to adhere too. DTSPs are anticipated to have inner checks in place to determine when updates are wanted to adjust to the revisions.
Thirdly, MAS has determined that licensed fee service suppliers and monetary establishments, even these licensed and supervised abroad for AML/CFT compliance, can’t be handled as “third events” underneath the FSM-N27 Discover. This implies DTSPs will not be allowed to depend on them to hold out buyer due diligence.
If a DTSP desires to depend on any third occasion for CDD, it will need to have correct inner processes to evaluate whether or not that occasion is appropriate. This consists of doing due diligence checks to ensure the third occasion meets the required requirements.
Obligatory Tech Safeguards and Speedy Incident Reporting
Below MAS’s proposed guidelines, DTSPs should guarantee their crucial IT methods are dependable, obtainable, and capable of recuperate rapidly from disruptions. They need to additionally put robust controls in place to guard buyer information from unauthorised entry or leaks.
Licensees would additionally want to supply incident particulars to MAS inside one hour. MAS clarified that its one-hour rule is supposed to present the regulator early warning so it will possibly assess potential dangers to the broader trade and public. MAS added that additional particulars may be shared after the preliminary alert.
By way of cyber hygiene, MAS would require DTSPs to fulfill primary safety requirements, resembling securing admin accounts, making use of safety patches, making use of anti-malware measures, and strengthening person authentication.
Whereas these baseline measures are obligatory, MAS additionally expects DTSPs to observe broader greatest practices outlined in its present expertise danger pointers.
Clear Conduct Requirements and Clear Threat Warnings
DTSPs should observe strict enterprise conduct guidelines, together with sustaining minimal working hours and offering clear, multilingual danger disclosures, particularly in regards to the danger of shoppers being unable to recuperate their funds within the occasion of agency failure.
MAS clarified that minimal working hours are required to make sure the general public, together with clients, regulators, and regulation enforcement, can contact the DTSP when wanted. These necessities apply equally to all DTSPs, no matter enterprise measurement or construction, as outlined in its up to date Singapore DTSP licensing framework.
Relating to disclosures, MAS won’t mandate what number of languages companies should use, however expects licensees to evaluate their buyer base and determine what’s crucial to make sure dangers are clearly understood. Corporations should additionally keep away from overstating their regulatory standing.
If any public supplies misrepresent the scope of MAS oversight, licensees should act promptly to right the errors and think about informing clients, relying on the impression. Whereas MAS expects companies to have inner processes in place to deal with these conditions, it doesn’t plan to introduce additional necessities for now.
What This Means for the Way forward for Digital Asset Regulation
The up to date Singapore DTSP licensing framework attracts a transparent boundary: it welcomes progress, however not with out safety. The message is just not about restriction, however about duty. Corporations which have relied on Singapore’s credibility whereas working past its regulatory attain will now want to choose: get licensed, restructure, or exit.
Featured picture: Edited by Fintech Information Singapore, based mostly on picture by EyeEm by way of Freepik