The landscape of cryptocurrency services in Singapore is undergoing a significant transformation as local firms are mandated to cease providing services to international clients by June 30, 2025. This directive from the Monetary Authority of Singapore (MAS) follows comprehensive feedback on the regulations introduced under the Financial Services and Markets Act 2022.

Any legal entity in Singapore engaged in offering token services to clients outside the nation must either pause these operations or shut them down entirely, unless they secure the necessary licensing by the stipulated deadline.

Essential Licensing for Crypto Firms

The MAS has clarified that entities under Section 137 of the FSM Act are considered to be conducting their business from Singapore, even if their activities largely occur internationally.

This means having a license is crucial, regardless of whether token services are the primary focus of the business. There will be no grace period offered—any firm operating post-June 30, 2025, without the required approval faces severe consequences.

Significant Consequences for Non-Compliance

Reports indicate that non-compliance with these regulations could result in penalties reaching up to SGD 250,000 (approximately USD 200,000). Furthermore, violators may face imprisonment for up to three years.

Only entities already compliant with existing financial regulations—such as the Securities and Futures Act, Financial Advisers Act, or Payment Services Act—can continue servicing overseas clients without facing major adaptations to their business model.

Experts Predict Challenging Licensing Journey

Industry expert Hagen Rooke from Gibson, Dunn & Crutcher has noted that obtaining new DTSP licenses will likely be uncommon. He highlighted that these services raise concerns related to anti-money laundering and the prevention of terrorist financing.

Due to strict qualifications, most firms may encounter challenges in securing a license. Rooke suggested that local businesses consider stripping out their Singapore connections or relocating portions of their operations to avoid stringent regulations.

Challenges Ahead for the Industry

Local small to mid-sized companies that have developed a global clientele are now confronted with a pivotal choice: either limit their services to a domestic audience or relocate their operations outside of Singapore.

Financial implications will play a critical role in this decision. The resources needed to satisfy the enhanced compliance measures might exceed what smaller firms can manage. There are concerns that this regulatory shift could lead to a talent drain, as skilled professionals might opt for more crypto-friendly environments.

In contrast, larger corporations and well-funded startups that are already licensed under other regulations are better positioned to adapt and thrive amidst these changes.

Featured image from Unsplash, chart from TradingView