From 30 June 2025, Singapore’s Financial Services and Markets Act 2022 (FSMA) will introduce a new licensing regime for Digital Token Service Providers (DTSPs), aligning local regulations with international standards set by the Financial Action Task Force (FATF). This marks a significant tightening of the regulatory perimeter for digital asset-related businesses operating from Singapore even if their services are rendered entirely to overseas clients.

Who Will Be Affected? ​

The DTSP licensing regime will apply to both individuals and business entities based in Singapore that offer digital token services to clients located outside of Singapore. This includes:

• Individuals or partnerships physically operating in Singapore.
• Companies and limited liability partnerships incorporated in Singapore.
• Any Singapore-based entity or person, even if the client base or service delivery is exclusively overseas.

Key Definitions

A Digital Token Service Provider refers to any entity that offers services involving the dealing, transfer, exchange, safekeeping, or advisory support for digital tokens. These include both cryptocurrencies like Bitcoin and Ether, as well as other blockchain-based tokens with utility or investment characteristics.

The term “outside Singapore” is interpreted broadly. It refers to the location of business activities and not just the client’s address or the place of incorporation. This ensures that entities using Singapore as a hub for virtual asset activities—whether front-office operations or strategic planning—fall within the regulatory net.

Under the FSMA, entities will also be required to assess the “fit and proper” status of key individuals, known as “relevant persons”, as part of the licensing process.

Scope of the New Framework

The incoming framework will have broad extraterritorial reach, applying to any DTSP that operates from Singapore, regardless of where its clients are located. This measure aims to close regulatory gaps and reduce the risk of regulatory arbitrage, ensuring that all digital token service providers anchored in Singapore are held to consistent standards.

DTSPs will be subject to wide-ranging obligations including:

• Licensing and registration requirements
• Anti-money laundering and counter-terrorism financing (AML/CFT) controls
• Corporate governance
• Risk management
• Cybersecurity
• Financial reporting, and
• Consumer disclosures.

Exemptions and Clarifications

Not all activities or actors will require a licence under the DTSP regime. For instance:

• Employees based in Singapore who work for foreign DTSPs are exempt from licensing, as long as they are not independently providing digital token services.
• Certain categories of services may be excluded from regulation, as set out under the FSMA (Exemption from Part 9) Regulations, though details will depend on MAS guidance closer to the commencement date.

Key Insights

How significant is this regulatory change?

While many digital asset firms are already regulated under existing laws (like the PS Act, SFA, or FAA), the DTSP framework marks a significant expansion in how Singapore regulates offshore-facing crypto activities. For firms that previously operated under the radar, this change may have a major impact.

Does this framework introduce new types of regulated activities?

The DTSP regime does not introduce brand-new service categories but clarifies and extends the reach of regulations to include previously uncovered services, such as digital token advisory provided to overseas clients.

Is this a new licensing pathway?

While the framework introduces a new licence category, MAS has made it clear that DTSP licences will be granted only in exceptional circumstances. The primary goal is to prohibit unlicensed operators, especially those using Singapore as a base while claiming to serve only overseas clients.

Next Step

For companies or individuals already engaged in digital asset services, the upcoming regime requires a careful review of:

• Your business model and client geography
• Where your sales and operational teams are located
• Whether your current structure exposes you to Singapore’s FSMA requirements

New Ark Consulting provides a one-stop customized service, including company registration, accounting and taxation, overseas relocation, and comprehensive consulting services. Feel free to contact our professional team anytime via WhatsApp at +65 8830 8077 for more information.

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