Singapore’s financial regulatory authority has set a firm deadline of June 30 for domestic cryptocurrency service providers to cease offering digital token (DT) products and services to international markets. This directive marks a significant step in the country’s evolving approach to crypto regulation.
The mandate was issued in response to public feedback on the proposed regulatory framework for Digital Token Service Providers (DTSPs), as outlined under Singapore’s Financial Products and Services Act of 2022 (FSM Act). The Monetary Authority of Singapore (MAS) clarified that no transitional provisions will be available for local DTSPs operating abroad. Essentially, any Singapore-registered entity, individual, or partnership engaged in providing DT services outside the country must either wind down their international operations or secure a license before the new rules take effect at the end of June.
According to MAS, “DTSPs subject to licensing under Section 137 of the FSM Act must cease or transition their foreign operations involving DT services by June 30, 2025.” This timeline emphasizes Singapore’s commitment to tightening oversight on cross-border crypto activities.
Potential Penalties for Non-Compliance
Under Section 137 of the FSM Act, companies based in Singapore are presumed to be operating domestically unless proven otherwise. This presumption applies even if their primary business is not related to token services but they conduct foreign activities involving digital tokens.
Violators of these regulations face substantial penalties, including fines of up to 250,000 Singapore dollars (approximately $200,000 USD) and potential imprisonment for several years. The MAS has emphasized that only entities already licensed or exempted under existing laws-such as the Securities and Futures Act, Financial Advisers Act, or Payment Services Act-may continue their operations without conflict with the new rules.
While licensing remains an option, industry experts suggest it will be a rare occurrence. Hagen Rooke, a partner at Gibson, Dunn & Crutcher, highlighted on LinkedIn that licenses will likely be granted only in exceptional cases, primarily due to concerns related to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT). Rooke advised firms to proactively restructure their operations to eliminate Singapore-based touchpoints and reduce regulatory risks.
Related: Singapore Blocks Access to Polymarket Over Unlicensed Gambling Concerns
Strengthening Borders: Addressing Cross-Border Crypto Risks
This move signifies a strategic tightening of Singapore’s crypto regulatory landscape. The requirement for DTSPs to cease foreign operations reflects broader international trends aimed at mitigating risks associated with digital assets. The country’s recent legislative developments underscore its intent to prevent regulatory arbitrage and ensure comprehensive oversight.
In April 2022, Singapore enacted the FSM Act, empowering MAS with enhanced authority to monitor and regulate crypto firms operating outside the country but registered within Singapore. The law mandates that DTSPs with international activities adhere to AML and CFT standards, even if they do not provide services domestically. MAS has expressed concerns that some crypto companies might exploit regulatory gaps by establishing a Singaporean presence while conducting unregulated activities elsewhere.
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