Singapore Tightens Digital Token Regulations, Web3 Industry Faces Major Challenges

On May 30, 2025, the Monetary Authority of Singapore (MAS) released a response document regarding new regulations for Digital Token Service Providers (DTSP), a move that will have far-reaching effects on the entire Web3 industry in Asia. The new regulations will officially take effect on June 30, 2025, and MAS has made it clear that there will be no grace period, which means that a large-scale "Singapore Web3 exodus" may have quietly begun.

MAS does not hide its "extremely cautious" attitude in this strongly worded document, marking an unexpectedly abrupt farewell to the past for Singapore, once hailed as the "Asian crypto-friendly paradise." This is not a gradual policy adjustment, but rather an almost "cliff-like" tightening of regulations. For those projects and institutions still on the sidelines, the question is no longer "whether to leave," but rather "when to leave" and "where to go."

Past Glory: The Golden Age of Regulatory Arbitrage

Looking back at Singapore in 2021, while other countries took stringent measures against cryptocurrencies, this city-state welcomed Web3 entrepreneurs with an open attitude. Many well-known institutions chose to set up their headquarters here, not only because of the 0% capital gains tax but also due to the "embracing innovation" attitude shown by MAS at that time.

At that time, Singapore was known as the "regulatory arbitrage paradise" of the Web3 industry. By registering a company here, one could legally provide digital asset services to users globally (except for Singapore), while also benefiting from the reputation of Singapore as a financial hub. This business model of "based in Singapore, serving the world" once attracted many Web3 practitioners.

However, the new DTSP regulations mean that Singapore has completely closed the door to a regulatory-friendly environment, and its stance can be simply summarized as: driving all unlicensed Web3 practitioners out of Singapore.

Definition of DTSP and its Impact

DTSP (Digital Token Service Provider) includes two types of entities: individuals or partnerships operating at a place of business in Singapore, and Singapore companies conducting digital token service business outside of Singapore. This definition seems simple, but it has far-reaching implications.

The definition of "place of business" by MAS is extremely broad, including "any location used for conducting business", even mobile stalls. This means that as long as there is no license in Singapore, conducting any business involving digital assets at any location may face legal risks, whether targeting local or overseas clients.

Regarding the situation of working from home, MAS's stance is somewhat ambiguous. While it may be acceptable for employees working for overseas companies to work from home, MAS's definition of "employees" is unclear, and it remains questionable whether project founders or shareholders fall under this category.

Broad Definition of Digital Token Services

The MAS has a very broad definition of digital token services, almost encompassing all related types of tokens and services, including the publication of research reports. This may imply that even KOLs or institutions releasing token investment analysis reports in Singapore may need DTSP licenses.

Potentially affected groups include:

• Individuals: Independent professionals (such as developers, consultants, market makers, miners), content creators and KOLs, core project members
• Institutions: unlicensed exchanges, various Web3 project parties

Conclusion

Singapore's recent regulatory move is clear: it aims to eliminate all non-compliant practitioners from the country. Almost any activity related to digital tokens could fall under regulatory scrutiny, regardless of scale. Due to the presence of many gray areas in relevant definitions, MAS may adopt a "case-by-case" enforcement strategy.

It is worth noting that the MAS has stated it will approve DTSP licenses with an "extremely cautious" approach, and applications will only be approved in "extremely limited circumstances." This marks the end of the regulatory arbitrage era in Singapore, and the industry faces new challenges and restructuring.