1. Introduction
Singapore has emerged as a leading global crypto hub. However, as of mid‑2025, Singapore’s regulators have introduced a Singapore Crypto Rule aimed at closing overseas loopholes—transforming its stance from permissive to sophisticated and firm.
2. What Is the Singapore Crypto Rule?
Under Part 9 of the Financial Services and Markets Act (FSMA) 2022, from June 30, 2025, all Digital Token Service Providers (DTSPs) based in Singapore—but serving clients abroad—must obtain a DTSP licence or cease cross‑border digital token operations.
DTSPs include crypto exchanges, wallet app providers, DeFi front‑ends, token issuers, and other services connected to crypto assets.
3. Why These Regulations Now?
- Closing loopholes: Previously, crypto firms in Singapore could serve users overseas without oversight. The Crypto Rule ends that, requiring all Singapore‑based DTSPs to operate under the same licensing standards.
- Global compliance: Aligning with FATF’s AML/CFT guidelines and the Travel Rule, Singapore aims to reduce regulatory arbitrage.
- Consumer protection: Enhanced licensing is part of MAS’s strategy to fortify investor safeguards, following FTX‑style failures.
4. Licensing Essentials
- No grace period: Unlicensed DTSPs must halt cross-border services by June 30, 2025, without exceptions.
- High licensing bar: MAS will only grant licences in exceptional cases, even to large exchanges such as Bitget and Bybit.
- Ongoing compliance: Licensed providers must maintain minimum capital, appoint local compliance officers, conduct annual audits, and adhere to robust AML and cybersecurity protocols.
5. Regulatory Highlights under the Rule
5.1 Consumer Protection
- Segregated custody: Client funds must be held separately from company assets.
- Daily reconciliation + third‑party custody: Mandated to reduce insolvency risk.
- No retail incentives: Promotions, airdrops, referral bonuses, credit purchases, or leverage-based trades are banned for retail investors.
- Risk‑awareness tests: Users must pass assessments to trade, ensuring they understand crypto volatility.
5.2 Travel Rule Enforcement
Complying with FATF, MAS enforces the Travel Rule: VASPs must collect and share user identity details for transfers over SGD 1,500 (approx. USD 1,100), and retain full records for all transactions. Providers must apply enhanced due diligence for non-custodial wallets.
6. Effects on the Crypto Ecosystem
- Exchanges & wallets: Must choose—either obtain a DTSP licence (rarely granted) or exit the Singapore cross-border market.
- Small & mid‑sized firms: Face significant compliance burdens and potential market exit.
- DeFi front‑ends: Even decentralized interfaces operating and monetizing tokens must comply if based in Singapore.
- Residents: Cannot use credit cards for crypto buys—only bank, debit, or regulated transfers are allowed.
7. Balancing Innovation & Regulation
This Singapore Crypto Rule reflects MAS’s strategy: uphold innovation in blockchain and digital assets, but within secure, transparent, and globally aligned regulatory frameworks. Singapore’s approach remains progressive yet uncompromising on risk and consumer safety.
8. What DTSPs Should Do Now
- Assess scope: Determine if you are considered a DTSP under FSMA Part 9.
- File early: Submit licence applications well before June 30, 2025.
- Bolster compliance: Set up AML/CFT systems, segregated accounts, custody solutions, travel‑rule protocols, and risk controls.
- Plan exit strategies: If licensing isn’t feasible, prepare to wind down overseas crypto services.
9. Conclusion
The Singapore Crypto Rule marks a strategic shift—liberal yet legally rigorous. By enforcing DTSP licensing, encompassing Travel Rule compliance, banning retail credit, and securing funds, Singapore ensures lasting credibility in global crypto finance. For crypto firms, the choice is clear: innovate within regulation—or pivot.
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