Singapore Ushers in a New Era of Crypto Regulation: A Comprehensive Guide to the DTSP Licensing Regime
Foreword
In yesterday’s article, we briefly outlined the dynamics of Singapore’s brand-new regulatory framework. Today, we take you through a comprehensive interpretation of the most critical designs and clauses within the DTSP licensing regime, and unpack the profound impact it could have on the entire Web3 ecosystem.
If you’re a Web3 business registered in Singapore — or engaged in any form of crypto asset services within Singapore — now may be the pivotal moment to reassess your compliance strategy. On June 30, 2025, Singapore will officially implement the Digital Token Service Providers (DTSP) regulatory framework under the Financial Services and Markets Act (FSMA), marking the entry of this Asian financial hub into a stricter era of crypto asset regulation.
This is not just regulatory lip service, but a brand-new system that is broad in scope, high in compliance threshold, and tough in enforcement. For the industry, it’s a long-overdue “licensing reshuffle.” For unlicensed practitioners, it could be a life-or-death choice: “either exit, or get licensed.”
Strict requirements, broad administrative reach, and expansive definitions of business conduct — these best encapsulate the DTSP licensing regime.
- From “Grey Areas” to “Licensing-Based Operation”: Singapore’s Regulatory Upgrade
Singapore has long been known for its openness to financial innovation, attracting a wave of crypto projects to set up local entities, R&D centers, or marketing teams. However, because the compliance path has never been fully clear, there’s been widespread “grey operations” in the crypto space: some firms incorporated in Singapore primarily serve overseas clients to bypass local oversight; others conduct token trading, custody, or brokering services as individuals, without registering as financial institutions.
All of this will be redefined with the official rollout of the DTSP regime.
According to Section 137 of the FSMA, any individual or entity “engaged in digital token services” in Singapore must hold a DTSP license. This requirement is not limited to locally-operating companies — it also applies to those that are merely registered in Singapore but serve foreign clients. In other words, even if your primary customers are in the US, Europe, or Africa, you must be licensed as long as you’re registered in Singapore.
This represents a systematic upgrade of the regulatory framework, based on a “territory + entity” dual jurisdiction standard: it looks both at whether you provide services in Singapore and whether you are a Singapore-registered legal entity.
- “What Kind of Business Requires a License?”: Extremely Broad Regulatory Scope
The DTSP regulatory scope covers nearly all the key financial and capital flow activities within the Web3 ecosystem. Including but not limited to:
Token swaps
Transfer facilitation
Underwriting and promotion of token issuance
Token custody and management
Match-making platforms
Design and trading of derivatives
Advisory services or white paper drafting related to tokens
One particularly noteworthy aspect is that the new regulation also includes KOLs, consultants, and media personalities offering “advice related to tokens” within the licensing obligations. If you’re in Singapore and provide advice on token issuance, trading, marketing, or deployment for clients, you fall under regulated services.
This marks a major identity shift for many “non-financial” roles such as Web3 marketers, tokenomics designers, and GameFi campaign planners. They must now realize: what was once considered a “soft service” is now subject to hard regulation.
- “I Work from Home — Do I Still Need a License?”: A Very Broad Definition of Business Conduct
A critical yet easily overlooked detail: Singapore’s regulators do not define “place of business” by whether you have a physical office.
According to the FSMA, as long as you are consistently providing a service within Singapore, you fall under the regulatory scope. Even if you are simply operating a project from your personal computer at home, engaging in on-chain matchmaking or advisory work — you are considered to be “conducting business” and must apply for a DTSP license.
Put more clearly: there are no grey areas here. Using VPNs or masking IPs does not serve as valid regulatory evasion strategies. If you’re physically located in Singapore, even with obfuscated digital operations, you could still face administrative penalties, license revocation, or even criminal liability if found non-compliant.
- What Business Activities Are Not Within Regulatory Scope?
Backend technical support services unrelated to crypto assets remain excluded from the DTSP regulatory scope. For example, the following business types are currently categorized as “non-financial services” and do not require a license:
Pure data storage services
Network communication protocols and technology development
Identity authentication or zero-knowledge proof tool development
Deployment and maintenance of blockchain infrastructure
Development and testing of non-tokenized assets (e.g., token-less public chain tools)
This means that if you merely provide Web3 tools without engaging in token issuance, trading, custody, or circulation — and do not directly offer capital or trading-related services — you are outside the regulatory mandate. However, this “boundary” must be navigated carefully: once your product or service ultimately facilitates value flow of tokens, you may trigger compliance red lines at any time.
- The Deeper Signal Behind DTSP: Higher Thresholds, Stricter Vetting, Faster Implementation
Compared with Singapore’s earlier Payment Services Act, the DTSP framework significantly raises the bar for compliance. For example:
License applicants must be a Singapore-registered company (or have a legal entity)
At least one director must be a Singapore resident
Capital requirements: minimum SGD 250,000, and higher for custody or derivatives services
Annual fees: minimum SGD 10,000/year
Approval policy is “extremely stringent”, with MAS explicitly stating: licenses will be granted only in “very rare cases”
This clearly shows that the Monetary Authority of Singapore (MAS) has a well-defined regulatory goal: to screen for participants with genuine capability, resources, and compliance awareness, while gradually phasing out marginal or opportunistic operators. Notably, this framework comes with zero grace period — from June 30, all unlicensed services must cease operations immediately.
Impact on the Industry: Another Round of Compliance-Driven Migration?
Regulation brings maturity to ecosystems. But like every “licensing-based transformation”, DTSP will trigger structural reshuffling. On one hand, large exchanges, stablecoin giants, and compliant wallet providers have been proactively preparing — institutions like Circle, Coinbase, DBS, and OKX have already obtained or are applying for digital payment licenses. On the other hand, small startups, outsourced teams, and GameFi marketing agencies may struggle to meet the licensing threshold due to capital or resource constraints, eventually choosing to exit.
Will there be a wave of “crypto migration” out of Singapore? That seems inevitable. Especially for projects with only legal entities in Singapore but overseas operations, moving to jurisdictions with friendlier compliance environments and lower licensing requirements will be a practical choice.
In the long run, though, this may not be a bad thing. Because over the past few years, one of the crypto industry’s greatest ailments has been the compliance vacuum that nurtured a flood of “pseudo-projects” and arbitrage-driven operations, squeezing out space for legitimate builders. The arrival of the DTSP regime sends a clear signal to the market: Singapore no longer welcomes vague grey innovations — it is reserving room only for projects capable of bearing global compliance responsibilities.
Final Words: Crypto Is No Longer a Regulatory Exemption Zone
As the crypto industry moves into a new phase of integration with sovereign financial systems, licensing becomes a trend, regulation becomes the new baseline, and risk management becomes the moat. Singapore’s new DTSP regulations are not a “crackdown,” but a pre-emptive fortification.
Those who truly aspire to build global Web3 infrastructure, asset issuance platforms, or payment rails will ultimately embrace regulation — and earn more room to grow through compliance.
So, DTSP is not the end. It’s a new beginning.The new regulatory era has arrived.The real question is — are you ready?
