Singapore's "crackdown" on Web3 marks the end of the era of regulatory arbitrage.

The Monetary Authority of Singapore (MAS) issued a response document on May 30, 2025, regarding new regulations for Digital Token Service Providers (DTSP), and many are still not aware that this will actually impact the entire Web3 industry landscape in Asia.

The new regulations will officially take effect on June 30, 2025, and MAS has made it clear that there will be no grace period! A large-scale "Singapore Web3 retreat" may have quietly begun.

"We will be extremely cautious." When MAS openly expresses this attitude in this strongly worded consultation document, Singapore, once hailed by global Web3 practitioners as "Asia's crypto-friendly paradise," is bidding farewell to the past in an unexpectedly drastic manner — not through gradual policy adjustments, but through an almost "cliff-like" tightening of regulations.

For those project parties and institutions that are still watching from the sidelines, this may no longer be a question of "whether to leave," but rather a choice of "when to leave" and "where to go."

Past Glory: The Golden Era of Regulatory Arbitrage

Remember Singapore in 2021? While China has banned cryptocurrency trading and the US SEC is wielding a regulatory stick, the small island nation is welcoming Web3 entrepreneurs with open arms. Three Arrows Capital, Alameda Research, FTX Asia Headquarters... One by one, the names chose to make their home here, not only because of the 0% capital gains tax, but also because of the "embracing innovation" attitude shown by MAS at that time.

At that time, Singapore could be called the "regulatory arbitrage paradise" of the Web3 industry. Here, registering a company allows you to legally and compliantly provide digital asset services to global users outside of Singapore, while also benefiting from the reputation of Singapore as a financial center. This business model of "being in Singapore while focusing on the global market" once attracted countless Web3 practitioners.

And now, the new DTSP regulations in Singapore mean that Singapore has completely shut the door on a regulation-friendly environment, and its attitude can be summed up in one simple sentence: to drive all those without licenses in the Web3 industry out of Singapore.

What is DTSP? A definition that makes one "deeply uneasy".

DTSP stands for Digital Token Service Provider. According to the definition in Section 137 of the FSM Act and the content of Document 3.10, DTSP includes two types of entities:

1. Individuals or partnerships operating in a business location in Singapore;

2. Singapore companies conducting digital token service business outside Singapore (regardless of whether the company originates from Singapore or elsewhere)

This definition seems simple, but it actually hides a deadly trap.

First of all, what is the definition of "place of business" in Singapore? The definition provided by MAS is "any location in Singapore used by a licensee to conduct business (including stalls that can move from one location to another)."

Note several key points in this definition:

• "Any location": There are no restrictions that it must be a formal business place.
• "Including stalls": Even mobile stalls are included, showing the broad scope of regulation.
• "Used for conducting business": The key is whether business activities are conducted at that location.

In simple terms, as long as you do not have a license in Singapore, engaging in any business involving digital assets in any location carries the risk of violating the law, whether you are a local company in Singapore or an overseas company, and regardless of whether you are targeting local or overseas clients.

So, will working from home be illegal?

In response to this issue, Baker McKenzie law firm submitted feedback to MAS in the document.

Baker McKenzie law firm specifically sought clarification from MAS on this issue:

"In light of the prevalence of remote work, does MAS intend for its policies to cover individuals employed by overseas entities but working from home or residential locations in Singapore?"

The law firm's concerns are very realistic. They have listed several potential pitfalls:

• Individuals providing DT services for overseas companies from home (possibly of a consulting nature)
• Employees or directors of overseas companies working in Singapore under a remote work arrangement.

But at the same time, the law firm is also trying to provide some "talismans" for those who work from home:

"Based on the drafting of current legislation, it can be argued that family or residential premises should not be included, as family or residential premises are generally not understood as places where the licensee conducts business."

However, the MAS poured a bucket of cold water on this issue:

"Under section 137(1) of the Financial Services and Markets Act, a DTSP licence is required for all individuals who are engaged in the business of providing digital token services outside Singapore at their place of business in Singapore, unless the individual falls under the FSCA A category of persons specified in Article 137(5). In this regard, if an individual is located in Singapore and is engaged in the business of providing digital token services to persons outside Singapore (i.e. individuals and non-individuals), the individual will need to apply for a licence under section 137(1) of the FSMA. However, if an individual is an employee of a foreign-incorporated company that provides digital token services outside of Singapore, the work performed by the individual as part of his or her employment with a foreign-registered company will not in itself trigger the licensing requirement under section 137(1) of the FSMA. ”

and

"However, if these individuals work in a shared office space or at the offices of affiliated companies overseas, they are obviously more likely to be included within the scope."

In summary, the new regulations are:

• Without a license, whether it is an individual or a company, it is not allowed to conduct business targeting local or overseas customers at any place of business in Singapore.
• If you are an employee of overseas staff, working from home is acceptable.

However, the new regulations also have many ambiguous areas:

• The definition of employees by MAS is very vague. Do project founders count as employees? Does holding shares count as employees? It's all up to MAS.
• If you are a BD or sales person from an overseas company and you go to someone else's shared office to discuss business, does it count as conducting business at a place of business? It is up to MAS to decide.

Vague definition of digital token services, will KOLs also be affected?

The MAS's definition of digital token services is astonishingly broad, covering almost all relevant token types and services. Even the publication of research reports is included?

According to the provisions of item (j) in Schedule 1 of the FSM Act, the regulatory scope includes:

"Any services related to the sale or offer of digital tokens, including: (1) providing advice related to digital tokens directly or in any form (electronic, printed, or otherwise) through publications, articles, etc., or (2) providing advice related to digital tokens through the publication or dissemination of research analysis or research reports (electronic, printed, or otherwise)"

This may mean that if you, as a KOL or institution, publish a report analyzing the investment value of a certain Token in Singapore, you may theoretically need a DTSP license; otherwise, it may be deemed illegal.

The Blockchain Association of Singapore issued a soul-searching question to MAS regarding this issue:

"Will traditional research reports be deemed related to token sales or offers? How should participants distinguish research reports related to token sales or offers?"

MAS has not provided a clear response, and this ambiguity can be said to make all content creators walk on thin ice.

Which groups may be affected?

Personal Identity Type (High Risk)

Independent practitioners: including developers, project consultants, market makers, miners, etc.

Content creators and KOLs: including analysts, KOLs, community operators, etc.

Core team members: including founders, BD, sales, and other key business personnel.

Institution Type (High Risk)

Unlicensed exchanges: CEX, DEX

Project Party: DeFi, wallet, NFT, etc.

Conclusion: The End of the Regulatory Arbitrage Era in Singapore

A terrifying reality is emerging: Singapore is serious this time, aiming to "drive out" all non-compliant individuals. As long as you are non-compliant, almost any activity related to digital tokens may fall under regulatory scrutiny. Whether you are in a luxury office building or on your sofa at home, whether you are the CEO of a large company or a freelancer, as long as it involves digital token services.

Due to the large gray areas and ambiguous definitions of "business premises" and "conducting business," MAS is likely to adopt a "case-based" enforcement strategy—first take down a few chickens, then warn the monkeys.

Want to temporarily seek compliance? Sorry, MAS has made it clear that it will review DTSP license applications in an "extremely cautious" manner and will only approve applications in "very limited circumstances."

In Singapore, the era of regulatory arbitrage has officially ended, and the era of big fish eating small fish has arrived.