On the 6th of June the Monetary Authority of Singapore (MAS) published a terse clarification with outsized impact: from 30 June 2025, any Singapore-incorporated firm that offers digital-token services solely to customers overseas must hold a Digital Token Service Provider (DTSP) licence—or shut down. In the same breath, the regulator warned that such licences will be granted only in “extremely limited circumstances,” citing money-laundering risk and the practical impossibility of supervising a business that has no Singapore-facing customer base.
For years global exchanges and DeFi middle-layers treated Singapore as the perfect corporate perch: English law, deep capital markets, and a regulator friendly enough to issue sandbox exemptions while scrutinising domestic retail flows. The new stance flips that script. Offshore-only models—think liquidity-routing desks, token-issuance vehicles or staking pools headquartered in Singapore but serving India, Vietnam or Africa—now face a three-week countdown to licensing or exile. MAS knows exactly who they are; officials told Asian Banking & Finance they believe the group is “a very small number,” yet the message is aimed at the next wave of founders as much as the current cohort.
Why MAS Is Pulling Up the Drawbridge
The decision slots neatly into Singapore’s layering of digital-asset guardrails. Payment Services Act (PSA) licensing in 2020 brought exchange, transfer and custody businesses inside an AML/CFT perimeter. Stablecoin rules in 2023 imposed 100% reserve and audit requirements. Now MAS is closing what lawyers called the “locate-but-don’t-serve” loophole. In its June statement the authority argued that a firm with zero local users is harder to supervise, yet could still launder illicit proceeds through Singapore-based bank accounts. That risk calculus hardened after a S$3-billion money-laundering bust in 2023 that involved shell companies with nominally “foreign only” operations.
Licensing is theoretically available, but MAS adds a twist: applicants must show “a meaningful nexus to Singapore’s digital-asset ecosystem.” Translation: a board of resident directors, local compliance staff, day-to-day decision-making plus a plan to serve domestic customers eventually. The bar is steep enough that MAS itself expects few, if any, approvals.
Immediate Fallout: Move, Merge or Morph
The clearest early signal came hours after the notice: WazirX, an India-focused exchange incorporated in Singapore, said it would redomicile to Panama and spin down its city-state entity before the deadline. Compliance advisers report a surge of calls from token-lending desks and yield-bearing stablecoin issuers asking whether a Cayman foundation plus Hong Kong operating subsidiary might keep Asian banking lines open without MAS approval. Banks, meanwhile, are triaging. One Singapore-based transactional-banking head tells me the “client continuance” review for every offshore-only crypto account is now top priority; cash accounts without a clear licensing path will be closed before MAS has to ask.
The rule also reverberates through investor term sheets. Venture funds that tout Singapore legal entities as a badge of institutional readiness now face awkward renegotiations. “We liked the MAS halo,” one Series A fintech investor concedes, “but if the halo comes with an unpredictable licensing timeline, we’ll accept a UAE free-zone domicile just as happily.”
Hub-and-Spoke No More?
When MAS first floated a DTSP framework in 2022, the objective looked surgical: capture niche businesses such as crypto-on-ramp aggregators or token-issuance advisers that fell between PSA and securities law. Since then the policy mood has darkened. The June clarification states bluntly that the supervisory burden outweighs the benefits when all users sit abroad. Compare that with Hong Kong, which this year approved exchanges that pledge only professional-investor access and largely foreign order flow. Singapore’s pivot therefore redraws the Asian map: Dubai and Abu Dhabi become the obvious shelters for “serve-the-world” exchanges; Hong Kong vies for North Asian order books; Singapore doubles down on institutions, asset-tokenisation pilots and projects like JPMorgan’s Partior—use-cases where regulators can peer into every wallet.
Data already hint at the divergence. MAS has granted just 16 in-principle approvals and 11 full licences under its Digital Payment Token category since 2020; Hong Kong’s SFC, by contrast, has okayed nine retail-facing exchanges in twelve months. If DTSP approvals prove rarer still, the city-state’s share of global spot-trading volume could fall even as it leads in permissioned pilots.
What “Licence or Leave” Means for Compliance and Cost
Obtaining a DTSP licence will not be a PSA redux. According to draft guidelines published last week, applicants must:
- maintain minimum base capital of S$250,000 (higher if custody is involved);
- appoint a Singapore-resident CEO and compliance lead;
- demonstrate end-to-end chain-analysis for every supported token;
- post an annual auditor’s report in MAS Form 3 within four months of fiscal year-end.
Firms accustomed to remote-first staffing and offshore custody will need payroll, premises and local audit contracts—hard costs that erode the “light-touch HQ” appeal Singapore once offered.
The AML bar is higher, too. Name-screening must cover both originator and beneficiary wallets, aligning with the FATF Travel Rule. MAS Notice FSM-N27 (issued alongside the clarification) spells out penalties up to S$1 million for each breach. In short: if a stablecoin desk cannot map wallet addresses to real-world names in real time, it will fail the licence test.
Policy Rationale vs. Industry Concerns
MAS insists the impact is contained. Officials told Asian Banking & Finance they see “only a very small number” of affected firms, and those are welcome to apply or pivot. Yet industry bodies counter that innovation suffers when sandbox graduates cannot scale globally from Singapore. The Singapore FinTech Association warns of a “talent drain” if engineers move with their employers to more permissive hubs. Lawyers note a tension: MAS promotes Project Guardian—its high-profile asset-tokenisation pilot with HSBC and UBS—while shutting the door on retail-lite crypto models that could feed liquidity to those very projects.
MAS’s reply is unambiguous: quality over quantity. The regulator would rather host fewer, better-capitalised players than police a long tail of offshore profit centres. That stance dovetails with broader reputational goals after last year’s money-laundering scandal and ongoing U.S. pressure to tighten crypto AML standards.
Comparison with Other Gateways
| Jurisdiction | Licence for offshore-only models? | Typical approval time | Notable hurdles |
|---|---|---|---|
| Singapore (DTSP) | Yes, but “generally not issued” | n/a (yet) | Resident CEO, granular travel-rule compliance, capital S$250k+ |
| Hong Kong (VATP) | Yes | 6-9 months | 98-point checklist, mandatory insurance, local cold-wallet storage |
| Dubai (VARA MTL) | Yes | 4-6 months | Tiered licence fees up to US$140k, substantial physical presence |
| UK (FCA Crypto-asset register) | Yes | 12-18 months | AML focus, tough business-model scrutiny but no local-customer requirement |
For start-ups the lesson is that regulatory arbitrage is narrowing. A Singapore entity can still run offshore custody or marketing, but only with an MAS badge—otherwise founders might as well incorporate where that badge is easier to earn.
What to Watch Before 30 June
- Licence applications: MAS will reveal by mid-July how many firms applied; the number will signal whether industry views approval as plausible or pointless.
- Bank de-risking: Expect local banks to demand DTSP licence evidence before extending credit lines beyond the deadline.
- Migration wave: Tracker sites already log half-a-dozen Singapore entities reincorporating in the UAE and Panama.
- Institutional pilots: Will MAS grant carve-outs for projects like tokenised Treasury repo platforms that currently serve offshore desks?
The Bottom Line
Singapore hasn’t slammed the door on crypto; it has narrowed the doorway to actors it can supervise face-to-face. For retail-lite exchanges, offshore staking pools and token-issuance SPVs, the message is blunt: become part of Singapore’s domestic ecosystem or pack your bags. Neat corporate structures that once signalled credibility now trigger higher scrutiny. As global regulators converge on AML expectations, the city-state is betting that being the well-lit room for digital assets is worth losing a few tenants who prefer the dark. Whether that bet lures more blue-chip tokenisation projects—or drives them to less demanding jurisdictions—will shape Asia’s crypto geography for years to come.