The Asian Web3 Industry May Welcome Significant Changes

Recently, the Monetary Authority of Singapore (MAS) announced new regulations for Digital Token Service Providers (DTSP), a move that could have far-reaching effects on the entire Web3 industry in Asia. The new regulations will officially take effect on June 30, 2025, and MAS has clearly stated that there will be no transition period. This means that a large-scale "Singapore Web3 exodus" may have quietly begun.

MAS has openly expressed its "extremely cautious" attitude in this sternly worded consultation document. This country, once praised by global Web3 practitioners as the "Asian crypto-friendly paradise," is bidding farewell to the past in an unexpected way—not through gradual policy adjustments, but through an almost "cliff-like" tightening of regulations.

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

Former Glory: The Golden Age of Regulatory Arbitrage

Looking back at Singapore in 2021, while other countries took strict measures against cryptocurrencies, this small island nation welcomed Web3 entrepreneurs with open arms. Many well-known institutions chose to establish their headquarters here, not only because of the 0% capital gains tax but also due to the "embracing innovation" stance demonstrated by MAS at that time.

At that time, Singapore was known as the "regulatory arbitrage paradise" for the Web3 industry. By registering a company here, one could legally and compliantly provide digital asset services to users worldwide (excluding Singapore), while also benefiting from the reputation of Singapore as a financial hub. This "based in Singapore, serving the world" business model once attracted countless Web3 practitioners.

However, the new DTSP regulations in Singapore mean that it has completely closed the door to a regulatory-friendly environment. Its attitude can be simply summarized as: expelling all unlicensed Web3 practitioners from Singapore.

Definition of DTSP and Its Impact

DTSP stands for Digital Token Service Provider. According to relevant regulations, DTSP includes two types of entities:

1. Individuals or partnerships operating in business premises in Singapore;
2. Singapore companies conducting digital token service business outside of Singapore (regardless of whether the company is from Singapore or elsewhere).

This definition seems simple, but it actually hides complexities.

Firstly, Singapore has a very broad definition of "business premises," including "any location in Singapore used by a licensee to conduct business (including stalls that can move from one location to another)." This means that as long as you are not licensed in Singapore, conducting any business involving digital assets at any location may pose legal risks, whether you are a local company or an overseas company, and regardless of whether your target customers are local in Singapore or overseas.

The MAS's response to the situation of working from home is also worrisome. While it is acceptable for overseas company employees to work from home, the definition of "employees" by the MAS remains unclear. Do project founders count as employees? Does holding shares count as employees? These will all be judged by the MAS itself.

In addition, the definition of digital token services by MAS is extremely broad, almost encompassing all related types of tokens and services. Even the issuance of research reports may fall under regulatory oversight. This means that if you, as an opinion leader or organization, publish a report analyzing the investment value of a certain token in Singapore, you may theoretically need a DTSP license; otherwise, it could be deemed illegal.

Affected Groups

The following groups may be significantly affected:

Personal Identity Type (High Risk):

• Independent practitioners: including developers, project consultants, market makers, miners, etc.
• Content creators and opinion leaders: including analysts, community operators, etc.
• Core project personnel: including founders, business development, sales, and other core business staff.

Institution Type (High Risk):

• Unlicensed trading platforms: centralized and decentralized trading platforms
• Project party: decentralized finance, wallet, non-fungible tokens, etc.

Conclusion: The End of the Regulatory Arbitrage Era in Singapore

A worrying reality has emerged: Singapore is serious this time about expelling all non-compliant practitioners. Almost any activity related to digital tokens could fall under regulatory scrutiny, regardless of whether you are working in a high-end office or on your home sofa, whether you are an executive at a large company or a freelancer.

Due to the significant gray areas in the definitions of "business premises" and "conducting business," MAS is likely to adopt an enforcement strategy of "case-based interpretation."

Want to seek help at the last minute and embrace compliance? I'm afraid it's too late. MAS has clearly stated that it will review DTSP license applications in an "extremely cautious" manner, and approvals will only be granted in "extremely limited circumstances."

In Singapore, the era of regulatory arbitrage has officially come to an end, and a new era of survival of the fittest is about to arrive.