The regulatory policy changes in Singapore's Web3 industry spark discussions

As a financial center in Asia and a hotspot for the Web3 industry, Singapore's recent changes in regulatory policies have attracted widespread attention from the industry. For a long time, Singapore has attracted a large number of cryptocurrency asset service providers and Web3 entrepreneurs due to its favorable tax policies and comprehensive legal framework. However, with the tightening of regulatory policies, the industry faces new challenges and opportunities.

Regulatory Policy Upgrades

The Monetary Authority of Singapore (MAS) issued a consultation paper on new regulations for digital token services in October 2024, and published a response document on May 30, 2025. The new regulations will officially come into effect on June 30, 2025, with key points including:

• Entities registered in Singapore, even if they provide cryptocurrency services for overseas clients, are required to obtain a DTSP license.
• Further refine and tighten the existing regulatory framework

This policy change indicates that Singapore is working to regulate the development of the cryptocurrency industry in response to the challenges posed by the rapid growth of the sector.

Reasons for Policy Adjustment

Singapore's tightening of regulations is not a sudden change in attitude, but rather a continuation of its consistent pragmatic style. As one of the first jurisdictions to begin regulating the cryptocurrency industry, Singapore has adopted a gradual regulatory strategy, providing space for industry development while continuously optimizing regulatory policies.

The main reasons for this policy adjustment include:

1. Prevent license abuse: Some institutions use licenses for improper packaging or to conceal non-compliant operations.

2. Combating Telecom Fraud: Curbing cryptocurrency-related telecom fraud activities based in Singapore.

3. Preventing Criminal Activities: Reducing the risk of illegal funds being laundered and used for terrorist financing through crypto assets.

The Monetary Authority of Singapore has raised the terror financing risk level of digital token service providers from "medium-low" to "medium-high", reflecting the regulator's concerns about the risks in the industry.

Policy Objectives

The adjustments to Singapore's regulatory policy primarily have the following goals:

1. Eliminate high-risk small platforms to reduce the overall risk in the industry.

2. Retain large institutions with strong financial strength and compliance capabilities.

3. Attract traditional financial institutions and investors to enter the Web3 field, promoting the healthy development of the industry.

Impact on the Industry

The new regulations have different impacts on various types of cryptocurrency service providers:

1. Non-licensed institutions that establish entities in Singapore and serve overseas clients must apply for the DTSP license as soon as possible.

2. Individuals providing remote working services to overseas clients in Singapore must assess whether a permit is required based on their specific circumstances.

3. Institutions that are registered only in Singapore but actually operate overseas may have a smaller impact, but potential risks should still be monitored.

4. Institutions providing services to local customers in Singapore have long needed to operate with a license, and the new regulations mainly affect cross-border services.

Coping Strategies

In light of the upcoming new regulations, Web3 organizations and practitioners may consider the following strategies:

1. Clarify the business model and assess whether a license application is needed.

2. If you decide to stay in Singapore for development, start preparing for the DTSP license application as early as possible.

3. If compliance costs are too high, consider relocating the business to other friendly jurisdictions.

Conclusion

Although the changes in Singapore's regulatory policies have brought challenges, they have also created conditions for the long-term healthy development of the industry. For large institutions with strong capabilities, this may be an opportunity to attract more funds into the cryptocurrency market; for small and medium-sized institutions, timely adjustments in strategy and finding the right positioning can also lead to development opportunities in the new regulatory environment. Industry participants should actively respond to changes and seize development opportunities under the new circumstances.