Effective June 30, 2025, all Singapore based entities offering digital token services to overseas clients must either secure a Digital Token Service Provider (DTSP) license under the Financial Services and Markets (FSM) Act 2022 or immediately halt all cross-border operations. This move marks a significant tightening of oversight by the Monetary Authority of Singapore (MAS) and is expected to reshape the city-state’s crypto landscape.

The New Regulatory Mandate

The MAS has issued a clear directive that there will be no grace period, transitional arrangements, or extensions for compliance. Any company, partnership, or individual based in Singapore that provides digital token services to clients outside the country must comply with the new licensing regime or cease such activities entirely.

This mandate applies universally, regardless of the scale or nature of overseas business. Even firms for whom foreign clients constitute a minor share of revenue are affected. The MAS aims to close a regulatory gap that previously allowed Singapore-based crypto companies to serve global users while avoiding stricter oversight in other jurisdictions.

Who Is Affected?

The definition of a DTSP under the FSM Act is intentionally broad. It includes any entity engaged in:

1. The transfer of digital payment tokens

2. Exchange between digital tokens and fiat or other tokens

3. Custody of tokens on behalf of others

4. Promotion of any token-related service

This scope encompasses centralized crypto exchanges, DeFi platforms, wallet providers, token issuers, and even non-crypto firms if they offer token-related services to clients outside Singapore. Importantly, the business model, revenue size, or direct user involvement does not exempt a firm from compliance. Even small-scale players, part-time projects, or side ventures tied to crypto fall under the mandate.

Strict Licensing Criteria

Obtaining a DTSP license is not a simple task. MAS has set a high bar, requiring a minimum base capital of SGD 250,000 for DTSP applications, which must be maintained as a cash deposit or capital contribution even for partnerships or individuals. The regulator has also signaled that licenses will be granted only in "extremely limited circumstances," primarily due to concerns around anti-money laundering (AML) and counter-terrorist financing (CFT). In practice, this means that most applications, especially those from firms serving only overseas clients, are likely to be rejected.

Notably, providers of pure utility or governance tokens are exempt from the DTSP licensing requirement, as are firms already licensed to serve Singapore-based customers under existing financial laws

Enforcement and Penalties

MAS has made it clear that failure to comply will result in severe enforcement action. Entities that continue to provide overseas digital token services without a DTSP license after June 30, 2025, face criminal charges. Penalties include fines of up to SGD 250,000 (approximately USD 200,000) and/or up to three years in prison. The agency has rejected industry calls for more flexible implementation and will not hesitate to prosecute violators.

Implications for the Crypto Industry

This regulatory overhaul signals Singapore’s intent to address cross-border risks and uphold its reputation as a responsible financial center. By targeting entities serving foreign markets, MAS aims to prevent regulatory arbitrage and ensure that all crypto activities linked to Singapore meet high standards of compliance.

Final Thoughts

Singapore’s new DTSP regime represents a decisive shift in the regulation of crypto firms with international ambitions. The June 30, 2025, deadline is final entities must either comply or exit the cross-border market, or risk severe penalties and criminal prosecution.