The Monetary Authority of Singapore issued the FSMA regulatory framework, which will officially take effect on June 30, 2025.

The Monetary Authority of Singapore (MAS) will officially implement the Financial Services and Markets Act (FSMA) on June 30, 2025, aiming to regulate the digital asset industry and maintain Singapore's status as a global financial hub. The legislation mainly targets Digital Token Service Providers (DTSP), including services such as buying, selling, transferring, exchanging, custody, and advisory.

The main objective of the FSMA is to prevent money laundering and terrorist financing. The act requires individuals or businesses that have an office or registered company in Singapore but primarily provide digital token services overseas to obtain a license and adhere to strict compliance standards.

Recently, MAS responded in detail to industry feedback and addressed several key issues:

1. License application standards: MAS will exercise strict scrutiny, and only a few eligible companies will be granted a license. Applicants must have a reasonable business model, be regulated overseas, and have a compliant company structure.

2. Application time and transition period: MAS will notify companies to prepare application materials 4 weeks in advance, but no additional transition period will be granted. Starting from June 30, 2025, unlicensed DTSPs must cease overseas services.

3. License fees and capital requirements: The application fee and annual fee are both set at 10,000 SGD, fixed and unchanging. The business must prepare a basic capital of 250,000 SGD, while individuals are required to deposit the corresponding cash.

4. License application targets: Companies with a business presence or registered in Singapore, such as those providing overseas digital token services, are required to apply for a license. MAS will determine whether it falls under overseas services based on front-office functions and client demographics.

5. Customer Due Diligence (CDD): After obtaining the license, businesses are required to conduct CDD on existing customers. The MAS will determine the completion time based on the level of customer risk.

6. Technical risks and cybersecurity: Enterprises need to ensure the stability of IT systems, protect customer data, and report to MAS within 1 hour after a significant event occurs.

7. Behavior and Disclosure Requirements: Enterprises are required to record transactions, issue receipts, publicly display exchange rates and fees, establish fixed business hours, and publish risk warnings, among other obligations.

8. Compliance Guidelines: MAS will consider publishing a dedicated FAQ for DTSP, but companies still need to establish specific compliance measures on their own.

For companies that already hold licenses under the Payment Services Act (PSA), Securities and Futures Act (SFA), or Financial Advisers Act (FAA), there is no need to apply for the DTSP license under the FSMA. However, the FSMA imposes higher compliance requirements for all DTSP-related businesses, including stricter technical risk management, submission of annual audit reports, and higher AML/CFT requirements.

In light of the upcoming regulatory changes, industry insiders suggest that companies should immediately self-examine whether they need to apply for licenses, prepare compliance measures in advance, proactively communicate with MAS, and closely monitor subsequent guidelines and FAQs. Companies can choose solutions based on their own circumstances, such as applying for licenses, ceasing overseas services, migrating to other jurisdictions, or adjusting their business models.

Singapore's FSMA regulatory framework will have a profound impact on the digital asset industry, and businesses need to respond promptly to adapt to this stringent regulatory environment.