Key Takeaways
- Singapore’s new crypto exchange regulations, which took effect on Monday, are a significant development in the industry. The regulations, aimed at combating money laundering and enhancing market confidence, have far-reaching implications for all crypto firms, including those that serve only foreign clients.
- All crypto firms are now required to hold licenses, including those that serve only foreign clients.
- As a result of the new regulations, several major players in the industry, such as Bitget and Bybit, are reportedly considering relocating to other jurisdictions like Hong Kong or Dubai, where they believe the crypto regulatory frameworks are more favorable.
Singapore’s deadline for enacting more burdensome crypto exchange regulations arrived on Monday, June 30, 2025, forcing several digital asset firms to shut down or face stiff penalties if they were unwilling to comply.
The country’s financial regulator, the Monetary Authority of Singapore (MAS), had set June 30 as the hard cutoff for compliance. This date marked the closure of a long-standing loophole that allowed overseas-only services to operate without local oversight, a loophole that many firms had exploited in the past.
Protecting Integrity of the Regulatory Framework
Last month, the city-state’s central bank announced that digital token service providers (DTSPs) serving only overseas clients must obtain a license to continue operations beyond June 30 or close their operations. The more burdensome crypto exchange regulations have been enacted via the country’s Financial Services and Markets Act. The new regulatory framework mandates anti-money laundering controls, local compliance officers, and cybersecurity audits, with penalties including fines of up to $185,000 and possible imprisonment.
Commenting about the move, Calvin Shen, chief commercial officer at Hong Kong-based digital asset financial institution Hex Trust, told the media:
“The move isn’t about restricting the industry […] but protecting the integrity of the regulatory framework.”
Leading Asian Financial Hub
In a subsequent statement, the Monetary Authority of Singapore added that it had:
“Set the bar high for licensing and will generally not issue a license.”
Singapore, which has carved out a niche for itself as a leading Asian financial hub, has previously faced reputation issues following several high-profile fraud cases in the emerging cryptocurrency sector. The biggest ones include the death of crypto hedge fund Three Arrows Capital and Terraform Labs, which both filed for bankruptcy in 2022. Referring to the challenge of dealing with firms that solely serve foreign clients, the central bank said:
“The money laundering risks are higher in such business models, and if their substantive regulated activity is outside of Singapore, the MAS is unable to supervise such persons effectively.”
Tightening Regulatory Controls
Crypto analysts have welcomed the move, stating that the tougher crypto exchange rules would tighten controls on crypto platforms.
Analysts welcomed the move to tighten controls on crypto exchanges. Chengyi Ong, head of Asia Pacific policy at crypto data group Chainalysis, told the media:
“With the new DTSP regime, MAS is reinforcing that financial integrity is a red line.”
As a result of tightening regulatory controls, according to a report from Bloomberg, some smaller firms have already ceased operations, while major ones, including Bybit and Bitget, are reportedly seeking to relocate to Hong Kong or Dubai, where they believe the crypto regulatory frameworks are more appealing.
Conclusion
When Three Arrows Capital filed for bankruptcy in 2022 following a massive sell-off of assets it had bet on, its Singaporean co-founder, Su Zhu, was arrested at Changi Airport while trying to leave the country and jailed for four months. Singapore-based Terraform Labs also saw its cryptocurrencies crash dramatically in 2022, forcing it to file for bankruptcy protection in the United States. By enacting more burdensome crypto exchange regulations, the city-state is trying to “balance the tension between crowding in business and managing risk.” Other jurisdictions might have to face the same questions and “decide how best to thread the needle.”
Frequently Asked Questions
Do operators need a license if they are based in Singapore but serve foreign clients?
Any Singapore-registered crypto business offering digital token services to overseas users must obtain a license under the Financial Services and Markets Act (FSMA) or risk penalties, including fines and imprisonment.
Can Singaporeans use credit cards to buy Bitcoin and other cryptocurrencies?
MAS has banned the use of locally issued credit cards for purchasing digital payment tokens (DPTs) to protect retail investors from taking on excessive debt and risk.
Have the new regulations affected decentralized applications?
Yes, if the front, service provider, or team operates from Singapore. While smart contracts remain permissionless, any interface or platform that facilitates access to token services must comply with MAS requirements if it targets retail users.