Written by: Lawyer Yang Qi
Introduction: Why Has Singapore Become a Global Benchmark for Cryptocurrency Regulation?
In recent years, Singapore has become one of the preferred destinations for global cryptocurrency companies and investors, thanks to its clear regulatory framework, open innovation environment, and strict compliance requirements. Whether traditional financial institutions (such as DBS Bank) or emerging crypto platforms (like CoinHacko), all must operate compliantly under the MAS (Monetary Authority of Singapore) regulatory system. However, as the industry develops rapidly, regulatory policies are constantly adjusting—from stablecoin new regulations to DeFi sandbox testing, Singapore is trying to find the best balance between "encouraging innovation" and "preventing risks".
This article will comprehensively analyze Singapore's cryptocurrency regulatory ecosystem from four dimensions: regulatory policies, typical cases, compliance practices, and future trends, helping practitioners precisely grasp compliance key points and avoid potential risks.
I. Detailed Explanation of Singapore's Cryptocurrency Regulatory System
1. Core Regulation: Payment Services Act (PSA, 2019)
MAS implements a tiered licensing management for cryptocurrency businesses through PSA, mainly covering:
- Digital Payment Token (DPT) services (such as exchanges, OTC platforms)
- Cross-border remittances
- Electronic wallet services
License Types and Application Conditions
| License Type | Applicable Objects | Capital Requirements | Business Restrictions |
| Standard Payment Institution (SPI) | Small enterprises | 100,000 Singapore dollars | Monthly transaction ≤6 million Singapore dollars |
| Major Payment Institution (MPI) | Mainstream exchanges, wallet service providers | 250,000 Singapore dollars | No transaction amount limit |
| Exempted License | Limited business scope (such as custody only) | Varies | Requires individual MAS approval |
Key Compliance Requirements:
- KYC/AML: Must perform customer identity verification (e.g., Singapore citizens need Singpass certification, different exchanges treat mainland Chinese passports differently)
- Fund Segregation: Customer funds must be deposited in custody accounts, not mixed with exchange's own accounts
- Transaction Monitoring: Need to deploy compliance tools like Chainalysis, Elliptic
- Regular Reporting: Submit financial and risk control reports quarterly
2. Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Requirements:
MAS follows FATF (Financial Action Task Force, an authoritative international organization) standards, requiring enterprises to:
- CDD (Customer Due Diligence): Strengthen review for high-risk customers (such as large transaction users, PEP political figures)
- STR (Suspicious Transaction Report): MAS received over 500 crypto-related STRs in 2022
- Travel Rule: Starting 2023, transfers ≥1,500 Singapore dollars require submission of transaction parties' information
3. Tax Policies
- GST Exemption: No consumption tax on cryptocurrency transactions since 2019
- Capital Gains Tax: Personal investment profits are usually tax-free, but professional traders may be taxed
- Corporate Taxes**: If cryptocurrency is a business asset (like exchanges, mining enterprises), profits are subject to 17% corporate income tax
II. Typical Case Analysis
Case 1: DBS Bank and Gemini Collaboration (2020)
Background: DBS Bank launched DBS Digital Exchange, but only for qualified investors
Compliance Highlights:
- Custody solution provided by Standard Chartered Bank (DBS now has its own custody service team), ensuring fund safety
- Adopted MAS-approved KYC process, combined with biometric technology
- Industry Impact: Traditional financial institutions entering, promoting industry compliance
Case 2: MAS Penalizes Three Exchanges (2022)
Violations: Ineffective AML implementation, leading to suspicious fund flows
Punishment Results:
- Binance: Listed in MAS investor warning list
- Huobi: Closed Singapore site, reapplying for license
- Independent Reserve: Fined 120,000 Singapore dollars, required to rectify within a specified period
- Regulatory Signal: MAS has zero tolerance for operating first and obtaining license later in Singapore
Case 3: Regulatory Response After Terra/LUNA Collapse (2022)
MAS Response:
- Halted all algorithmic stablecoin-related businesses
- Required exchanges to delist high-risk tokens (like UST)
- New Regulation: 2023 Stablecoin Regulatory Framework requires 100% reserve for issuers
III. Compliance Application Practical Guide
1. License Application Process (Taking MPI as an example)
1. Preliminary Preparation (1-3 months)
- Build local team (at least 1 Singapore-nationality compliance officer)
- Prepare business plan, equity structure diagram
2. Formal Submission (6-12 months)
- Fill out G-G 01 form on MAS website
- Submit AML policy, technical architecture description
3. MAS Review
May require on-site inspection or executive interviews
4. Post-Approval Obligations
- Submit monthly liquidity reports
- Undergo third-party audit annually
2. Common Rejection Reasons:
- Unclear actual controller background (e.g., involved in money laundering records)
- Insufficient technical security (e.g., failed penetration test)
- High-risk business model (e.g., leverage trading exceeding limits)
IV. Future Regulatory Predictions for Singapore
1. DeFi Regulatory Sandbox: MAS will launch a pilot, allowing limited operation of compliant DeFi projects
2. Non-Fungible Token Regulation: May be included in PSA regulatory scope, focusing on preventing fraudulent issuance
3. Cross-border Collaboration: Joint regulation of stablecoins with Hong Kong and Japan to prevent regulatory arbitrage
V. Conclusion: How to Seize Singapore's Crypto Market Opportunities Under Strict Regulation?
Although Singapore's cryptocurrency regulatory system is strict, it is highly transparent and predictable, providing a long-term stable development environment for compliant enterprises. For different market participants, we offer the following key recommendations:
Exchanges/Project Parties:
Apply for MAS license early to avoid penalties or being forced out for "operating without a license"
Focus on regulatory dynamics in emerging fields like stablecoins, DeFi, Non-Fungible Tokens
Establish strong AML/KYC processes, use on-chain monitoring tools (like Chainalysis)
Institutional Investors:
Prioritize MAS-licensed platforms (such as DBS Digital Exchange, Independent Reserve)
Be cautious of high-risk tokens (like algorithmic stablecoins, anonymous coins)
Individual Investors:
Utilize Singapore's tax-free policy to optimize investment strategy
Avoid participating in unregulated ICOs or DeFi projects
In the future, as MAS further regulates areas like cross-border payments and digital asset securitization, Singapore is poised to consolidate its position as the "Asian Crypto Hub". Only by proactively adapting to regulation can enterprises truly capture the long-term dividends of this market.
