MAS Clarifies Regulatory Regime For Digital Token Service Providers, Addressing Industry Concerns
In Brief
MAS clarified that starting June 30 local digital token service providers offering services to customers outside Singapore must obtain a license or stop operating, while providers of utility and governance tokens remain exempt from licensing requirements.
The Monetary Authority of Singapore (MAS) has provided clarification on the scope of its Digital Token Service Providers (DTSPs) regulatory framework. Beginning 30th June 2025, DTSPs that offer services exclusively to customers outside Singapore involving digital payment tokens and tokens linked to capital market products will be required to obtain a license.
MAS has established stringent criteria for licensing and generally does not grant licenses for such business models, citing heightened money laundering risks and the challenge of effective supervision when the primary regulated activities occur outside Singapore. DTSPs operating without a license under these conditions will be required to discontinue their regulated activities.
Service providers dealing with digital payment tokens or tokens related to capital market products who serve customers within Singapore are already regulated, and there will be no changes to the scope of their permitted activities. These licensed providers may also extend their services to clients outside Singapore.
Additionally, providers of services related to other types of tokens, such as utility or governance tokens, are not subject to licensing or regulation under the current framework and therefore are unaffected by these requirements.
Furthermore, due to the increased risks associated with the specific conditions described, existing Digital Token Service Providers (DTSPs) that serve only customers outside Singapore will be required to discontinue this activity once the regime takes effect on 30th June 2025. MAS has maintained a consistent stance on this matter since its initial response to the public consultation on 14th February 2022, as well as in subsequent statements issued on 4th October 2024 and 30th May 2025.
The authority has also contacted entities that may be impacted by the DTSP regulations, based on available information, to clarify the policy and discuss plans for an orderly cessation of their activities. The agency noted that, according to the information it has, only a very small number of such providers exist.
Singapore Orders Local Crypto Firms To Cease Overseas Activity By June 30
The clarification was issued following widespread concern after the agency mandated that local digital token service providers must cease offering services to overseas markets by the June 30 deadline.
MAS emphasized that no transitional arrangements will be granted for local DTSPs operating abroad. Any company, individual, or partnership incorporated in Singapore that provides digital token services outside the country must either stop these operations or obtain a license once the DTSP regulations take effect at the end of June. According to Section 137 of the Financial Services and Markets (FSM) Act, businesses based in Singapore are considered to be operating domestically and are therefore required to be licensed, even if overseas token-related activities are not their primary line of business.
Entities found in violation of these rules may face fines up to 250,000 Singapore dollars (approximately $200,000) and imprisonment for up to three years, as initially outlined.
The agency now has clarified that providers offering services related solely to utility and governance tokens are exempt from these regulations and are not required to seek a license.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
