MAS Sets Hard June 30 Deadline for Unlicensed Crypto Firms Serving Overseas Clients

Singapore's Monetary Authority (MAS) has delivered an ultimatum to the city-state's crypto industry: obtain a Digital Token Service Provider (DTSP) license or stop serving overseas clients by June 30, 2025. The regulator's firm stance leaves no room for negotiation, with no transition period offered and penalties awaiting non-compliant firms.

The directive affects all Singapore-based crypto firms or those incorporated in Singapore that provide digital token services to clients outside the country without the required DTSP license under the Financial Services and Markets Act 2022 (FSM Act).

No Grace Period, Limited Licensing Opportunities

In a paper published on Friday , MAS made clear that DTSPs subject to licensing requirements under Section 137 of the FSM Act must "suspend or cease carrying on a business of providing DT services outside Singapore by 30 June 2025," with the regulator explicitly stating there will be no transition period and no exceptions for unlicensed operators.

The regulatory framework, which emerged from a consultation paper published on October 4, 2024, defines DTSPs as individuals, partnerships, or Singapore corporations operating from a place of business in Singapore or incorporated in Singapore while providing digital token services to overseas clients.

What makes this development particularly challenging for the industry is MAS' indication that it will consider granting licenses only under "extremely limited circumstances." The regulator has set stringent criteria for potential applicants, requiring them to demonstrate:

• Valid reasons for not providing digital token services in Singapore despite operating from the city-state.
• Compliance with internationally agreed standards from bodies including the Financial Stability Board, the International Organisation of Securities Commissions, and the Financial Action Task Force.
• Existing regulation and supervision in all countries where they provide services outside Singapore.

High Barriers to Entry

The licensing regime comes with substantial financial requirements designed to ensure firms maintain a "meaningful presence" in Singapore. Successful applicants will face an annual license fee of $10,000, regardless of the size and scope of their operations or the number of digital token services they provide.

Additionally, firms must maintain minimum initial and ongoing financial requirements of $250,000 in base capital, total capital contribution, and cash deposit. The regulator has also established competency requirements for CEOs, directors, partners, and managers, demanding sufficient experience in operating DTSP businesses and understanding of Singapore's regulatory framework.

License holders will be subject to ongoing compliance obligations, including annual independent audits of transactions related to digital token services, with audit reports submitted directly to MAS.

Industry Pushback Falls on Deaf Ears

During the consultation period that closed on November 4, 2024, industry participants raised concerns about the proposed four-week commencement notification period, arguing it was insufficient for preparing license applications. They requested transitional arrangements and temporary exemptions to continue operations while applications were under review.

However, MAS has rejected these requests, maintaining its position that unlicensed operators must cease overseas services by the June 30 deadline without exception.

The regulator also dismissed industry suggestions for tiered fee structures based on business size and scope, opting instead for a flat annual fee structure applied uniformly across all licensees.

Regulatory Rationale

MAS has justified the strict approach by citing heightened risks associated with cross-border crypto services. The regulator argues that DTSPs may be more susceptible to money laundering and terrorism financing risks due to the internet-based and cross-border nature of their operations.

This regulatory stance builds on earlier measures, including anti-money laundering and countering terrorism financing requirements published on April 2, 2024, for digital payment token service providers.

The regulation represents a significant tightening of Singapore's crypto regulatory environment, potentially forcing many local firms to either obtain expensive licenses, restructure their operations, or exit overseas markets entirely.

With less than four weeks remaining until the June 30 deadline, affected firms face an urgent decision: secure one of the limited licenses available under MAS' stringent criteria or cease serving international clients from their Singapore operations.