Charles Esther
The Monetary Authority of Singapore (MAS) has provided clear guidance on its Digital Token Service Providers (DTSPs) framework following widespread anxiety within the crypto industry about a potential ban on firms serving overseas clients.
In an announcement dated June 6, MAS confirmed that from June 30, crypto firms offering services exclusively to customers outside Singapore related to digital payment tokens and capital market product tokens will be required to obtain a license.
However, the regulator emphasized that such licenses will be issued only in very limited situations.
MAS stated, “The bar for licensing is set very high, and generally, licenses will not be granted.”
This cautious approach stems from the difficulties in supervising offshore firms and the associated risks of money laundering.
MAS highlighted its inability to effectively oversee these overseas operations.
As a result, crypto businesses that fail to secure the necessary licenses will be compelled to stop their regulated activities.
Impact on the Crypto Industry and the Potential Exodus
The June 30 deadline set by MAS caused significant attention within the crypto sector, particularly when it mandated local crypto service providers to halt digital token services to overseas customers.
This regulatory shift has already influenced business decisions.
For instance, WazirX, a Singapore-based crypto exchange serving Indian clients, announced plans to relocate its operations to Panama shortly after MAS’s announcement.
Hagen Rooke, a partner at Gibson, Dunn & Crutcher, reinforced the regulator’s tough stance on licensing.
In a LinkedIn post, he noted that MAS would issue licenses under the new rules only in very rare cases due to regulatory concerns such as anti-money laundering (AML) and counter-terrorism financing (CFT) risks.
Strengthening Crypto Regulation in Singapore
The latest MAS announcement underlines Singapore’s intent to tighten its control over the local crypto market.
While firms serving customers within Singapore are already regulated, the new licensing requirements now extend to firms servicing clients abroad.
MAS also clarified that not all crypto-related services fall under the new licensing regime.
Specifically, providers dealing with tokens that function solely as utility or governance tokens are exempt and unaffected by the updated regulations.
This regulatory move follows reports indicating high digital asset popularity in Singapore.
A recent survey revealed that 94% of respondents were familiar with at least one form of digital asset, underscoring widespread crypto awareness in the country.
The MAS’s approach reflects a cautious balancing act between fostering innovation and managing risks associated with offshore crypto operations.
The high licensing bar and the emphasis on supervision highlight Singapore’s commitment to maintaining a secure and regulated crypto environment, even as the global crypto landscape continues to evolve rapidly.
