The Asian Web3 Industry Landscape Is Facing Major Changes

On May 30, 2025, the Monetary Authority of Singapore (MAS) published a response document regarding new regulations for Digital Token Service Providers (DTSP), a move that will have far-reaching effects on the entire Asian Web3 industry. The new regulations will officially take effect on June 30, 2025, and the MAS has clearly stated that there will be no transition period. This means that the "Singapore Web3 Great Retreat" may have quietly begun.

MAS expresses an extremely cautious attitude in this strongly worded consultation document without any concealment. Once praised by global Web3 practitioners as the "Asian crypto-friendly paradise," Singapore is bidding farewell to the past in a surprising manner—not through gradual policy adjustments, but through an almost "cliff-like" tightening of regulations.

For those project parties and institutions that are still observing, the question they now face is no longer "whether to leave" but rather "when to leave" and "where to go."

Past Glory: The Golden Era of Regulatory Arbitrage

Looking back at Singapore in 2021, when China imposed a complete ban on cryptocurrency trading and the U.S. Securities and Exchange Commission (SEC) ramped up regulatory measures, this small island nation opened its arms to welcome Web3 entrepreneurs. Many well-known institutions chose to establish their headquarters here, not just because of the 0% capital gains tax, but also due to the "embracing innovation" stance demonstrated by MAS at the time.

At that time, Singapore was known as the "regulatory arbitrage paradise" of the Web3 industry. By registering a company here, one could legally and compliantly provide digital asset services to users worldwide (except Singapore), while enjoying the reputation of Singapore as a financial center. This business model of "being in Singapore, with a global mindset" attracted countless Web3 practitioners.

However, the new DTSP regulations in Singapore mean that the country has completely closed the door to a regulatory-friendly environment. Its attitude can be simply summarized as: to expel all unlicensed Web3 practitioners from Singapore.

Definition of DTSP and Its Impact

DTSP stands for Digital Token Service Provider, defined according to relevant laws and regulations, including two types of entities:

1. Individuals or partnerships operating in a business premises in Singapore;
2. Singapore companies providing digital token services outside of Singapore (regardless of where the company originates from)

This definition seems simple, but it actually hides dangers.

The MAS's definition of "business premises" is very broad, including "any location in Singapore used by a licensee to conduct business (including movable stalls)." This means that as long as there is no license in Singapore, conducting any business involving digital assets at any location may violate the law, whether aimed at local or overseas customers.

Is working from home illegal? The response from MAS is vague. While it may be acceptable for employees of overseas companies to work from home, there are still many gray areas, such as whether project founders count as employees, whether holding shares counts as being an employee, etc., which are all interpreted by MAS.

Definition of Digital Token Services and Their Impact

The definition of digital token services by MAS is very broad, even including the publication of research reports. This may mean that if a KOL or institution publishes a report analyzing the investment value of a certain token in Singapore, it may theoretically require DTSP licensing; otherwise, it may be deemed illegal.

Groups that may be affected include:

Personal Identity Type (High Risk):

• Independent practitioners (developers, project consultants, market makers, miners, etc.)
• Content creators and KOLs (analysts, community operators, etc.)
• Core team members (founders, BD, sales, etc.)

Institution Type (High Risk):

• Unlicensed exchanges (centralized and decentralized exchanges)
• Project parties (DeFi, wallets, NFTs, etc.)

The End of Regulatory Arbitrage in Singapore

Singapore's recent regulatory actions indicate that the country is cracking down on all non-compliant activities, and almost any activity related to digital tokens may fall under regulatory scrutiny. Due to the significant gray areas in the definitions of "business premises" and "conducting business," the MAS is likely to adopt a "case-based" enforcement strategy.

It is worth noting that MAS has clearly stated that it will approve DTSP licenses in an "extremely cautious" manner, and applications will only be approved in "extremely limited circumstances."

In Singapore, the era of regulatory arbitrage has officially come to an end, and the industry landscape may undergo significant changes.