Written by FinTax
4. Basic Research on Crypto Regulation in Singapore
(1) Basic framework
In recent years, Singapore has continuously strengthened and improved its regulatory framework for crypto assets, gradually establishing a legal framework centered on the Payment Services Act 2019 (PSA) and the Financial Services and Markets Act 2022 (FSMA). The former establishes licensing regulations, anti-money laundering and counter-terrorism financing (AML/CFT) requirements, and operational compliance obligations for digital payment token services (DPT services); the latter supplements regulations on market integrity, cross-border cooperation, and law enforcement powers within the broader financial services sector. The two laws, interconnected, provide a clear legal basis and compliance boundaries for the issuance, trading, custody, payment, and related services of crypto assets.
Within this framework, the Monetary Authority of Singapore (MAS) has significantly tightened licensing and business conduct regulations in recent years, supplemented by strict enforcement. With the implementation of key licensing provisions of the FSMA this year, MAS requires all crypto companies established in Singapore but serving only foreign clients to obtain a license within a specified period, lest they face significant fines and criminal liability. Tokenize Xchange, an exchange, announced its withdrawal from the Singapore market due to difficulties in its license application, shifting its operations to Malaysia and Abu Dhabi. Meanwhile, Binance has chosen to retain its local team to continue its license application, while Bitget and Bybit are considering relocating some operations to less regulated jurisdictions.
(2) Key provisions
PSA is the first comprehensive regulation to systematically incorporate Digital Payment Token (DPT) services. Its original intention was to address the payment and capital flow risks brought about by the rise of FinTech and crypto assets.
The law adopts a "functional regulation" approach, meaning that regardless of the technology used, any service involving the flow of funds and payment functions is subject to regulation. Specifically, the PSA categorizes payment services, specifically creating a "digital payment token service" category that covers a variety of activities, including token-to-fiat currency exchange, token-to-token exchange, token custody, wallet services, and intermediary matching. This system directly requires all relevant institutions to apply for a license before entering the Singapore market. Common license types include the Standard Payment Institution License (SPL) and the Large Payment Institution License (LPL). The former is suitable for smaller businesses, while the latter imposes higher requirements on capital, risk management, and compliance. To mitigate systemic risks, the PSA also establishes strict compliance and business oversight requirements, such as Know Your Customer ( KYC ) procedures, Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) procedures, safeguarding and segregating customer funds, prohibiting misleading advertising and market manipulation, and submitting regular business and financial reports to the Monetary Authority of Singapore (MAS). In recent years, as application thresholds have continued to tighten, most internationally renowned trading platforms (such as Binance, Bybit, Crypto.com, etc.) have encountered strict scrutiny in their license applications, and some have even withdrawn from the Singapore market. This phenomenon directly reflects the PSA's institutional orientation of "high thresholds and strong supervision."
FSMA is mainly used to make up for the shortcomings of PSA in cross-border business, market integrity and law enforcement.
As Singapore gradually became a regional crypto hub, a large number of overseas service providers offered Debit Payment (DPT) services to Singapore residents online. The FSMA emerged as a response, further expanding its regulatory reach. Key provisions include: First, cross-border regulation, clarifying that even if a company operates overseas, any service provided to Singaporean customers must comply with local laws and regulations, or face criminal or civil penalties; second, market integrity, granting the MAS greater authority to combat market manipulation, misrepresentation, insider trading, and other activities to maintain market credibility; third, anti-money laundering and counter-terrorist financing, requiring both domestic and international service providers to comply with international standards and strengthen cross-border information disclosure and reporting mechanisms; and fourth, enforcement authority, empowering the MAS to directly impose fines, injunctions, business restrictions, and even criminal prosecution. These provisions have directly altered the industry landscape. On the one hand, some unlicensed overseas exchanges have been forced to withdraw due to the inability to legally reach Singaporean customers. On the other hand, licensed institutions are required to meet higher capital and transparency requirements, such as establishing more robust internal compliance systems and risk control frameworks. It is worth mentioning that some key provisions in FSMA were implemented in a phased manner after their release, and all of them came into effect as of June 30, 2025.
(3) Specific details
1. License
Singapore implements a strict licensing and permitting management system for digital payment token service providers (DPTSPs), mainly based on the Payment Services Act 2019 (PSA) and its amendments, and the relevant provisions of Part 9 of the Financial Services and Markets Act 2022 (FSMA).
DPT licensing system under PSA
According to the PSA, Category 6, “Digital Payment Token Services,” has been formally brought under regulatory oversight. This category covers services such as the exchange of digital payment tokens for fiat currencies, the exchange of tokens between tokens, token custody, wallet services, and intermediary matching. Institutions providing these services must apply for one of the following two types of licenses:
Standard Payment Institution (SPI) license: Suitable for small and medium-sized DPTSPs. Application requirements include being registered as a Singaporean company, having a local business location and a track record accessible to regulators, and at least one member of management being a Singapore citizen, permanent resident, or holder of an employment pass. Minimum registered capital is SGD 100,000, and risk management capabilities commensurate with the scale of the business must be demonstrated.
Major Payment Institution (MPI) license: Applicants must meet the following requirements: high transaction volumes or businesses involved in multiple payment services. This license requires more stringent requirements, typically including greater capital reserves, segregation of customer funds, and security mechanisms.
In 2023, MAS further strengthened the application requirements. All companies applying for new licenses or changing their licenses to add DPT services must submit a legal opinion issued by a professional law firm, which must clearly state the business model and whether the relevant services are subject to the PSA. At the same time, it must also be accompanied by a compliance assessment report completed by an independent external audit agency, covering business compliance and AML/CFT mechanisms.
Expanded Regulation of DTSP Under FSMA
Part 9 of the FSMA introduces the Digital Token Service Provider (DTSP) licensing regime, aiming to address gaps in the PSA's regulatory framework for cross-border businesses. From June 30, 2025, any Singapore-registered company or institution with a physical presence in Singapore that provides digital token services to overseas clients will be required to apply for a DTSP license.
MAS stated that this type of DTSP model carries high money laundering risks and is difficult to regulate. Therefore, it rarely approves such licenses, effectively closing the gray area of regulatory arbitrage . Even in the rare cases where a license is granted, it must meet strict standards, including AML/CFT checks, cross-border information sharing, and technical and operational compliance.
Both the PSA and FSMA licensing regimes aim to ensure that digital payment token services operate under high regulatory standards in Singapore through high-threshold licensing requirements, strict compliance requirements, and the prevention of regulatory arbitrage. These measures contribute to maintaining financial stability and market integrity, while also clarifying the boundaries of entry for legitimate operators.
2. Stablecoins
Singapore was the first country in the world to launch a dedicated stablecoin regulatory framework. In August 2023, the MAS issued the "Regulatory Framework for Stablecoins," which came into effect in October 2024 through amendments to the Payment Services Act (PSA) and supporting sub-acts. This framework primarily targets "qualified single-currency stablecoins" (SCS), aiming to protect user funds, enhance transparency, and strengthen market confidence.
According to MAS regulations, only stablecoins that meet the following conditions can be identified as “qualified stablecoins” (MAS-regulated Stablecoins):
Anchor: Must be fully pegged and exchangeable at 1:1 to the Singapore Dollar (SGD) or a G10 fiat currency;
Issuer: Limited to issuers incorporated and regulated in Singapore;
Issuance size: The circulation size must reach/exceed S$5 million to be included in the mandatory supervision scope;
Payment attributes: It must be used primarily as a payment tool rather than a speculative investment token.
To ensure the redemption ability of stablecoins, regulators require that qualified stablecoins must have sufficient high-quality reserve assets:
100% reserve backing: The total issuance amount must be fully backed by low-risk, highly liquid assets (such as cash and treasury bills);
Custody requirements: Reserve assets must be held in a regulated financial institution (bank or custodian) and segregated from the issuer’s own funds;
Regular audits: Issuers are required to publish monthly reserve reports and have annual audits conducted by independent auditing agencies to ensure adequacy and transparency.
Stablecoin issuers must fulfill a series of information disclosure and risk management obligations:
White paper disclosure: A detailed white paper must be published, explaining the governance mechanism, reserve arrangements, and liquidation and redemption rules;
Risk Warning: Users are clearly informed that stablecoins are not risk-free and are subject to market liquidity and technical risks;
Redemption obligation: Must promise to redeem at a 1:1 ratio within a reasonable time (usually within 5 business days);
Prohibition of mixed issuance: The same institution shall not issue regulated and unregulated stablecoins at the same time to prevent confusion among investors.
MAS's goal in promoting stablecoin regulation is to establish a "trusted stablecoin category" for the market. Qualified stablecoins will enjoy greater recognition in payment systems and financial applications, and MAS also intends to allow them to interoperate with traditional electronic payment systems. In contrast, stablecoins that do not meet these criteria (such as tokens pegged to non-G10 currencies) may not be promoted as MAS-regulated stablecoins and may be subject to stricter advertising and usage restrictions.
3. Compliance and Reporting
In Singapore, cryptocurrency service providers (DPTSPs) must not only obtain a license but also adhere to strict compliance and reporting obligations. These requirements are primarily derived from the Payment Services Act (PSA), the Financial Services and Markets Act (FSMA), and relevant MAS guidelines, focusing on Know Your Customer (KYC)/AML processes, transaction record retention, and suspicious transaction reporting.
DPT service providers are required to implement comprehensive customer due diligence (CDD) and ongoing monitoring measures:
Know Your Customer (KYC): Before a customer opens an account or conducts a large transaction, the customer's identity must be verified, including name, address, and ID (PSA §23, FSMA §36).
Risk tiering management: Service providers must adopt differentiated due diligence measures based on the risk level of their clients (high-risk clients include cross-border fund movers and politically exposed persons (PEPs)).
Continuous monitoring: Continuously monitor the customer's trading patterns. If any abnormal trading patterns are found, investigation must be strengthened and records must be retained.
Service providers must keep complete records of all DPT-related transactions and customer information for future regulatory review or law enforcement:
Retention period: at least 5 years (PSA §47);
Record scope: including transaction date, amount, counterparty identity, payment instrument, source of funds and purpose;
Electronic archiving requirements: The use of electronic systems for storage is allowed, but the authenticity, integrity and traceability of the data must be guaranteed.
According to Singapore’s Drug Proceeds (Confiscation) Act (CDSA) and Terrorism (Suppression of Financing) Act (TFA), all DPT service providers are obliged to report suspicious transactions:
Trigger conditions: If a service provider knows or suspects that a transaction involves money laundering, terrorist financing or other illegal activities, it must submit a suspicious transaction report to the Financial Intelligence Agency of Singapore (STRO, Suspicious Transaction Reporting Office) within 15 working days;
Criminal liability: If the declaration is not made as required, both the institution and the responsible person may be held criminally liable (CDSA §39, TFA §8);
International Cooperation: MAS shares some STR data with overseas regulators for cross-border law enforcement cooperation.
Singapore ensures transparency and traceability in the DPT market through compliance and reporting mechanisms. Know Your Customer (KYC)/AML processes prevent anonymous transactions from concealing illicit capital flows; transaction record retention provides evidence for subsequent audits and regulatory investigations; and suspicious transaction reporting provides an early warning mechanism to combat cross-border money laundering and terrorist financing. These three elements combine to establish Singapore as one of the most stringent cryptoasset compliance baselines globally.
4. Investor Protection
In Singapore, financial regulators prioritize not only financial stability and compliance obligations but also investor protection related to crypto assets. Core requirements encompass advertising restrictions, risk warning obligations, and the prohibition of misleading statements. These requirements are primarily governed by the Financial Services and Markets Act (FSMA 2022), the Payment Services Act (PSA 2019), and specific guidelines issued by the MAS (particularly the MAS 2022 "Advertising Guidelines for Digital Payment Token Service Providers").
MAS explicitly requires that DPT service providers must not market their services to the retail public by exaggerating returns or through improper channels:
Restricted channels: Prohibit the promotion of DPT services in public places (such as subways, bus stations, shopping malls) or events with high contact with the public;
Promotional media: Gifts, raffles, airdrops, etc. may not be used to attract public participation;
Permitted channels: Information disclosure may only be made through the company’s official website, mobile app, or official social media pages.
All DPT service providers must display risk warnings prominently on their customer interfaces to ensure that investors understand the high-risk nature of digital assets:
Tips: Must state that "cryptocurrencies are not suitable for all investors and their value may fluctuate significantly and may result in total loss."
Presentation method: The prompts must be clear and easily visible, and must not be hidden in lengthy documents or small print clauses;
Special protection for retail investors: For first-time traders, service providers must conduct a risk suitability assessment to confirm their risk tolerance.
DPT service providers must adhere to the principles of truthful, complete and non-misleading statements:
Prohibited Behavior: Do not use misleading terms such as "guaranteed returns", "zero risk", or "principal guaranteed";
Information Disclosure: Product terms, fees, custody arrangements, liquidation mechanisms, etc. must be fully, accurately, and easily understood.
Consequences of non-compliance: If misleading statements are provided, MAS has the right to revoke the license, impose heavy fines, and even pursue criminal prosecution in serious cases.
The core logic of Singapore's investor protection system lies in curbing improper promotion, strengthening risk awareness, and ensuring truthful disclosure. In 2022, the MAS specifically emphasized that crypto assets must not be promoted as a "shortcut to speculative wealth," but rather should guide market participants to rationally understand the risks. This series of measures made Singapore one of the first jurisdictions globally to strongly regulate crypto asset advertising and risk warnings, effectively reducing the risk of retail investors suffering significant losses due to information asymmetry and market speculation.
Overall, Singapore's regulatory approach consistently prioritizes compliance. Regulators have established a clear legal framework, supplemented by detailed implementation standards, systematically integrating cryptoasset businesses into the existing financial governance system. International media and industry experts widely believe that this institutional arrangement has effectively enhanced market transparency and solidified Singapore's reputation for compliance as a global financial center. However, the high threshold of compliance requirements has also objectively driven some companies to relocate to jurisdictions with more relaxed regulations, such as Hong Kong and Dubai. As a result, Singapore has gradually established itself as a benchmark for strict regulation in the global crypto governance landscape. While this may inhibit market expansion and innovation in the short term, it contributes to a stable, secure, and sustainable market environment in the long term. In summary, this section has systematically summarized the relevant laws and regulatory practices, clearly presenting the key points. For more detailed provisions, please refer to the original texts of the PSA and FSMA.
V. Conclusion
Overall, Singapore has formed a relatively complete dual tax and regulatory framework in the governance of crypto assets.
In terms of taxation, the government consistently treats cryptocurrencies as non-legal tender. Therefore, daily use is primarily subject to income tax and Goods and Services Tax (GST) rules: whether profiting from trading, paying for goods and services with tokens, or issuing and exchanging digital tokens, there are clear boundaries between taxable and tax-free holdings. Since Singapore does not have a capital gains tax , selling crypto assets solely due to appreciation in value is generally not taxable, keeping the tax landscape relatively simple.
In terms of regulation, Singapore prioritizes compliance. Through its core legal framework, encompassing the Payment Services Act (PSA 2019) and the Financial Services and Markets Act (FSMA 2022), these institutions establish detailed rules covering licensing, stablecoin management, compliance and reporting, and investor protection. The Monetary Authority of Singapore (MAS) ensures a highly transparent and accessible market through strict enforcement and ongoing guidance. While some businesses have opted for more relaxed jurisdictions like Hong Kong or Dubai due to cost and regulatory constraints, Singapore has earned global recognition for its exemplary high regulatory standards, providing institutional support for the long-term sustainable development of the market.
Globally, Singapore's path highlights a combination of clear taxation and strict regulation. Compared to the fragmented regulation in the United States, the EU's gradual progress on the Markets in Crypto-Assets (MiCA) Directive, and the UK's lagging stablecoin regulation, Singapore has established a more comprehensive institutional framework. This high barrier to entry may inhibit business expansion in the short term, but in the long term, it provides a replicable experience for integrating crypto assets into the traditional financial system through a transparent and stable institutional environment.
