Thomas Daniels
Singapore’s central bank, the Monetary Authority of Singapore (MAS), has issued a firm directive requiring all Singapore-based Digital Token Service Providers (DTSPs) to terminate their overseas operations by June 30, 2025, unless they obtain a license under the Financial Services and Markets Act 2022 (FSM Act).
Non-compliance could result in severe penalties, including fines of up to S$250,000 (approximately $185,000) and imprisonment for up to three years. This regulatory measure follows MAS’s finalized stance after an industry consultation on the proposed framework for DTSPs.
Under the FSM Act, any entity incorporated in Singapore—whether a company, individual, or partnership—is presumed to be conducting its business from Singapore. Thus, DTSPs with overseas activities are obligated to comply with licensing requirements, even if such operations are not their core business.
MAS has made it clear that no transitional period will be granted. Firms must either cease their foreign services or secure the necessary licenses by the June deadline. Only those already licensed or exempted under existing frameworks, including the Securities and Futures Act, Financial Advisers Act, or Payment Services Act, are allowed to continue operating without violating the new rules.
Legal experts have cautioned that licensing under the new regime will be rare. According to Hagen Rooke, a partner at Gibson, Dunn & Crutcher, such licenses will be issued only in exceptional cases due to significant regulatory concerns, particularly regarding Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) compliance.
This move reinforces Singapore’s efforts to close regulatory loopholes and mitigate cross-border financial risks associated with digital assets. The FSM Act, enacted in April 2022, extends MAS’s regulatory oversight to crypto firms that, although based in Singapore, operate primarily abroad. The central concern is that these entities might exploit Singapore’s regulatory credibility while engaging in potentially unregulated activities outside its jurisdiction.
