MAS Tightens Crypto Oversight: Unlicensed Overseas-Facing Entities Will Be Blocked

A major regulatory shift is about to reshape how certain digital token service providers operate in Singapore. Starting June 30, 2025, the Monetary Authority of Singapore (MAS) will require all digital token service providers (DTSPs) that are registered in Singapore but serve only overseas clients to be licensed, or cease operations immediately.

This is not an ad hoc policy move, but part of a multi-year strategy to strengthen the integrity of Singapore’s digital asset ecosystem. In this article, we break down the background, key provisions, and what businesses must do to stay compliant.

What Services Are Regulated?

According to MAS, the new rules primarily target:

Who’s Regulated:

• Digital token service providers (DTSPs) registered in Singapore but providing services exclusively to overseas clients

Regulated Services Include:

• Digital Payment Token (DPT) services (e.g., Bitcoin, Ethereum trading)

• Tokenised capital market products (e.g., tokenised stocks, bonds)

Not Regulated:

• Utility tokens (e.g., platform vouchers)

• Governance tokens (e.g., DAO voting rights)

MAS has made it clear: these DTSPs must apply for and obtain a license before June 30, 2025 or stop all operations thereafter.

Why the Regulatory Clampdown?

There are two core drivers behind this policy tightening:

1. High Money Laundering Risks
   Crypto assets are fast, borderless, and often anonymous—making them an attractive tool for money laundering, fraud, and other illicit activities.

2. Regulatory Blind Spots
   MAS has found that companies registered in Singapore but targeting only overseas clients often conduct key operations outside MAS’s purview, making effective supervision difficult.

Why Focus on Overseas-Facing Companies?

MAS explained that such firms exploit Singapore’s reputation while avoiding local compliance obligations. Though they claim to serve only foreign clients, these companies are still legally domiciled in Singapore—and thus carry reputational risks for the country if anything goes wrong abroad.

MAS emphasized:

“We have a responsibility to prevent unregulated token services from being registered in Singapore and leveraging our financial reputation for high-risk activities.”

“If unlicensed providers face issues overseas, Singapore’s reputation is still on the line.”

The move aims to uphold Singapore’s status as a trusted, well-regulated international financial hub.

This Is Not a Surprise – Regulatory Planning Started Years Ago

Some may view the June 30 deadline as abrupt, but MAS has laid the groundwork since 2020, when the Payment Services Act (PSA) was introduced to regulate DPT services like trading and custody.

Then in April 2022, Singapore passed the Financial Services and Markets Act (FSMA), introducing a new DTSP licensing regime. This expansion specifically covered firms that:

• Provide DPT or tokenised capital market product services

• Target overseas clients, regardless of local activity

Notably, MAS did not immediately enforce FSMA. Instead, it launched multiple public consultations and clearly stated:

“There will be no transitional period for DTSP licensing. Necessary adjustments must be completed before the effective date.”

On May 30, 2025, MAS released a 94-page final response paper, confirming that:

• All affected firms must obtain a license or in-principle approval by June 30, 2025

• There will be no grace period or exemption window

This demonstrates Singapore’s commitment to regulatory transparency and long-term planning.

Two Unlicensed Platforms to Be Blocked

As a signal of strict enforcement, MAS and the Singapore Police Force jointly announced that two unlicensed platforms will be geo-blocked from June 20, 2025:

• 🟥 Octa – Leverage trading in forex and commodities

• 🟥 XM – Trading of forex, indices, stocks, and cryptocurrencies

Both platforms were promoting and offering services to Singapore residents without a license, violating the Securities and Futures Act (SFA).

What Should Businesses Do Now?

Every crypto business should seriously assess its exposure under the new regime:

Ask yourself:

1. Do I currently hold a valid license or exemption under PSA/SFA?

2. Am I providing any form of DT services to overseas clients?

✅ If YES to Question 1:

• You are already within scope—no new license required.

• But you must strengthen compliance, including AML, CDD, and risk disclosures.

❌ If NO to Question 1:

• You must apply for a DTSP license and receive in-principle approval by June 30, 2025, regardless of whether your clients are in Singapore.

MAS has left no room for ambiguity:

• ⚠️ No grace period

• ⚠️ No tolerance for “grey zone” tactics

• ⚠️ No regulatory arbitrage via Singapore entity registration

What Activities Are Not Regulated?

MAS clarified that not all crypto-related activities fall under DTSP licensing requirements. The following do not require a DTSP license, provided they don’t involve handling customer assets or executing trades:

1. Pure Advisory and Technical Services

• Blockchain architecture and design

• Tokenomics and compliance consulting

• Legal structure design

• Product functionality advice

2. Marketing and Publicity Services

• Brand marketing and content strategy

• Community management

• PR, advertising, and event planning

⚠️ However: If your service involves assisting with token sales, distribution, or managing client assets, it may trigger regulatory obligations.

This regulatory development is not a crackdown, but a calculated, multi-year effort to safeguard Singapore’s financial system while supporting the growth of compliant Web3 and fintech innovation.

By closing the gap on overseas-facing entities, Singapore is sending a strong signal:
Reputation, integrity, and compliance are non-negotiable pillars of its digital asset strategy.

As the June 30 deadline approaches, proactive compliance is the only path forward for digital token service providers aiming to operate in or from Singapore.

References

1. Monetary Authority of Singapore (MAS) – Response to Feedback Received on the Proposed Amendments to the Digital Token Service Providers Regime under the Financial Services and Markets Act 2022.
    Published on 30 May 2025.

2. Monetary Authority of Singapore (MAS) – Clarification on the Scope of Regulated Digital Token Services under the FSMA.
    Media release dated 6 June 2025.

3. Legislative Branch – Singapore Statutes Online – Financial Services and Markets Act 2022 (FSMA).
    Part 9: Digital Token Service Providers licensing regime, in effect since April 2022.

4. Lianhe Zaobao (7 June 2024) – Singapore Introduces New Regulations on Overseas Activities of Digital Token Service Providers to Mitigate Money Laundering Risks.

5. TechNode Global (9 June 2025) – MAS Clarifies Regulatory Regime for Digital Token Service Providers.

6. FinTech News Singapore (9 June 2025) – MAS Clarifies Rules for Crypto Service Providers With 30 June Deadline.