Singapore’s central bank has cracked down hard. The Monetary Authority of Singapore (MAS) issued a firm directive. Following this, local crypto businesses must stop serving overseas markets immediately. They face a strict deadline: June 30, 2025. Alternatively, these firms must secure a special license. Failure means risking massive fines or even jail time. This move shakes Singapore’s fintech landscape profoundly.
Digital Token Service Providers (DTSPs) are squarely in focus. These firms handle digital token transactions and custody. The MAS order specifically targets Singapore-incorporated entities. It covers companies, individuals, and partnerships. This rule applies even if overseas activities aren’t their main business. Furthermore, no grace period exists despite industry pleas. Transitional arrangements were firmly rejected.
The Deadline Directive
MAS set June 30th as the cut-off point. By this date, DTSPs must halt all overseas digital token services. Section 137 of Singapore’s Financial Services and Markets Act (FSM Act) demands it. The regulator clarified this assumption clearly. Any Singapore-based entity operates from Singapore, MAS stated. Therefore, offering services abroad requires licensing under this act. Otherwise, operations must cease entirely. The message leaves no room for doubt.
Obtaining the needed DTSP license seems exceptionally difficult, however. Legal expert Hagen Rooke highlighted this stark reality. Gibson Dunn partner Rooke explained MAS’s tough stance publicly. Licenses will be granted only in “extremely limited circumstances,” he wrote. Heightened worries about money laundering drive this caution. Counter-terrorism financing fears also play a major role. MAS views overseas models as inherently risky. So, most applicants will likely face rejection. Some firms already hold other financial licenses, though. These include permits under older payment or securities laws. Such exempted companies can continue operating freely. They avoid conflict with the new DTSP rules. For everyone else, the path forward is narrow.
Penalties for Non-Compliance
Ignoring the June 30th deadline invites severe punishment. Violators face staggering financial penalties. Fines could reach 250,000 Singapore dollars (approx. $200,000 USD). Moreover, responsible individuals risk prison time. Sentences may extend up to three years. MAS emphasised its enforcement commitment strongly. The regulator will actively monitor compliance. Attempts to bypass rules won’t be tolerated.
This crackdown addresses serious cross-border risks, MAS explained. Singapore passed the foundational FSM Act back in April 2022. It significantly expanded MAS’s regulatory reach. The law targets firms exploiting potential loopholes. Specifically, companies register in Singapore for credibility. Then, they conduct less-regulated activities abroad. This practice creates dangerous regulatory gaps, MAS believes. Terrorist financing and money laundering risks escalate.
The directive follows a formal consultation process. Industry feedback was gathered late last year. Many firms requested exemptions or a phased approach. MAS firmly rejected these appeals. Furthermore, proposals for special levels were dismissed. The regulator prioritises closing vulnerabilities decisively. Singapore aims for a secure digital asset ecosystem.
Industry Reactions and Challenges
Industry reaction mixes concern and resignation. Crypto firms face massive operational headaches. They must rapidly restructure or shrink internationally. Some might exit overseas markets entirely. Others may relocate key operations abroad. Nevertheless, MAS warned against superficial moves. Simply shifting headquarters won’t suffice if control stays in Singapore. Using intermediaries also carries significant risk.
Online commentary reflects the tension. Some users question the rules’ enforceability on decentralised tech. Others joke about drastic internet blocks. Furthermore, business leaders voiced practical worries during consultations. The short implementation timeline causes major stress. Limited license approvals threaten global business models. Singapore’s crypto hub status feels uncertain again.
What’s Next for Crypto Firms?
The countdown to June 30th is well underway. Unlicensed DTSPs serving overseas clients face stark choices. Firstly, they can completely cease those activities. Secondly, they can attempt the tough licensing process. Thirdly, operational restructuring offers another path. Removing all Singapore touchpoints might “de-risk” them, Rooke suggested. Time for decisive action is running out fast.
Currently, only 33 firms hold full digital payment token licenses. Names like Coinbase and Anchorage appear on the list. Cumberland SG possesses in-principle approval. These licensed players can continue serving global clients. They operate under MAS’s watchful supervision. For others, uncertainty reigns until the deadline passes. Singapore’s crypto chapter enters a strict new phase.
Written By Fazal Ul Vahab C H
