MAS Orders Crypto Firms to Stop Overseas Operations
Singapore’s central bank, the Monetary Authority of Singapore (MAS), has ordered all Singapore-based Digital Token Service Providers (DTSPs) to stop offering digital token services to foreign markets by June 30, 2025. Non-compliance can attract fines of up to $200,000 and imprisonment for up to three years.
No Transition Period for Overseas Services
The directive is in the wake of MAS’ final stance on a new regime for the Financial Services and Markets Act (FSM Act) 2022. MAS, through its recent notice, clarified that there will be no transitional relief. Any business in Singapore, individual, or partnership already offering digital token services abroad will be required to wind down or take out a license under Section 137 of the FSM Act.
“DTSPs… need to suspend or stop conducting a business of supplying DT services outside Singapore by 30 June 2025,” the MAS said.
Severe Penalties for Non-Compliance
All Singapore-incorporated entities are, under the FSM Act, assumed to be carrying out business locally, whether or not their token-related activities are foreign-centered. This also applies to companies for which such services are not their core business.
Offenders will have to pay the following severe penalties:
- Penalties of up to S$250,000 (about $185,000)
- Imprisonment not more than three years
Companies that are already licensed or exempted under existing laws — such as the Securities and Futures Act, Financial Advisers Act, or Payment Services Act — may be allowed to remain in business in certain instances.
Licenses will hardly be granted
Legal practitioners warn that it will be very restricted to obtain a license under the new regime. Gibson, Dunn & Crutcher Partner Hagen Rooke noted that licenses would be issued “only in very exceptional circumstances” due to the increasing regulatory oversight on Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT).
Rooke advised affected corporations to restructure their business activities promptly to eschew Singaporean jurisdictional risk.
A Shift to Restrain Regulatory Arbitrage
The new framework is taken from Singapore’s 2022 FSM bill, which raised MAS’ oversight of crypto firms that are incorporated in Singapore but based abroad. The authority highlighted worries that some firms could exploit jurisdictional loopholes, posing cross-border financial risks.
MAS reiterated that even where DTSPs are only foreign, they are still under AML and CFT requirements, with Singapore ramping up its hold on the rapidly evolving digital asset space.
