Singapore Tightens Crypto Rules Overseas Firms Face Ban

The Monetary Authority of Singapore (MAS) has clarified its stance on the Digital Token Service Providers (DTSPs) regime, addressing industry concerns about a potential ban on crypto firms serving overseas clients. In a June 6 announcement, MAS stated that starting June 30, crypto firms providing services solely to customers outside of Singapore relating to digital payment tokens and tokens of capital market products will need to be licensed. However, the regulator emphasized that such licenses will be granted only in "extremely limited circumstances."

MAS cited the difficulty of supervising offshore firms and the risks of money laundering as key concerns. The agency stated, "MAS has set the bar high for licensing and will generally not issue a license." Consequently, businesses unable to obtain licenses will "have to cease their regulated activities."

The crypto market reacted to the MAS's deadline of June 30 for local crypto service providers to stop offering digital token services to overseas markets. This announcement has already prompted some changes. For instance, India-serving but Singapore-based crypto exchange WazirX announced that it is moving its operations to Panama shortly after the MAS set the deadline.

Hagen Rooke, a Partner at Gibson, Dunn & Crutcher, had previously stated that licenses would be issued only in rare cases. He noted that the MAS will grant licenses under the new framework only in extremely limited circumstances due to regulatory concerns, such as those related to anti-money laundering and counter-terrorism financing.

Singapore's regulatory shift indicates a tightening of controls over the local crypto industry. The new rules clarify that crypto companies serving local customers in Singapore are already subject to regulation, and the rules are now expanded to those serving customers abroad. However, MAS clarified that not all crypto-related services are affected. Providers of services in relation to other tokens, such as those only used as utility and governance tokens, are not subject to licensing or regulation under the new regime.

This regulatory move follows reports that digital assets are quite popular in Singapore. Crypto awareness in the country has reached an all-time high, with a significant portion of respondents in a recent survey indicating familiarity with at least one digital asset. The MAS's actions reflect a broader trend of increased scrutiny and regulation in the crypto industry, aimed at ensuring compliance and mitigating risks.