Singapore’s central bank has set a strict deadline of June 30 for local crypto service providers to stop offering digital token (DT) services to overseas markets.
The directive comes from the Monetary Authority of Singapore’s (MAS) response to industry feedback on its proposed regulatory framework for Digital Token Service Providers (DSTPs) under its Financial Services and Markets Act of 2022 (FSM Act).
MAS stated that no transitional arrangements will be made for local DTSPs providing services abroad. It stated that any Singapore-incorporated company, individual or partnership that provides DT services outside Singapore must either cease operations or obtain a license when the DTSP provisions come into force by the end of June.
“DTSPs which are subject to a licensing requirement under section 137 of the FSM Act must suspend or cease carrying on a business of providing DT services outside Singapore by 30 June 2025,” MAS wrote.
Violators could face fines of nearly $200,000
Under Section 137 of the FSM Act, Singapore-based businesses are presumed to be operating from Singapore and are thus subject to licensing. This includes companies whose overseas token-related activities are not their primary business activity.
Companies found violating the laws will be subject to hefty fines of up to 250,000 Singaporean dollars (nearly $200,000) and imprisonment of up to three years.
MAS said that only firms licensed or exempted under existing financial laws, such as the Securities and Futures Act, Financial Advisers Act or Payment Services Act, may continue to operate without conflicting with the new rules.
Even though DTSPs could get licensed, a lawyer said that it would be in rare cases. In a LinkedIn post, Hagen Rooke, a Partner at Gibson, Dunn & Crutcher, said licences will be issued only in rare cases, due to heightened regulatory concerns around Counter-Terrorist Financing (CFT) and Anti-Money Laundering (AML).
“The MAS will grant licences under the new framework only in extremely limited circumstances (as this type of operating model generally gives rise to regulatory concerns, e.g. AML/CFT-related),” Rooke wrote.
The lawyer urged companies to consider swift action to de-risk through operational restructuring to remove their Singapore touchpoints.
Related: Singapore blocks access to Polymarket over unlicensed gambling concerns
Singapore addresses cross-border risks
The move signals a major tightening of regulatory oversight on crypto activity by Singapore’s authorities. The mandate to DTSPs to cease overseas activities stems from regulatory developments aimed at addressing risks in the digital asset sector.
In April 2022, Singapore passed the FSM bill, granting MAS greater authority to regulate crypto firms that operate outside the country but are based in Singapore.
The law requires DTSPs with overseas operations to comply with AML and CFT standards even if they do not offer services within Singapore. MAS expressed concerns that crypto firms could exploit regulatory gaps by registering in Singapore while conducting unregulated activities abroad.
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