Unpacking Singapore's Financial Services and Markets Act: What Crypto Firms Need to Know

On June 30, 2025, key crypto licensing provisions in Singapore’s Financial Services and Markets Act (FSMA) finally take effect — three years after the legislation passed. In a long-awaited consultation response issued on May 30, 2025, the Monetary Authority of Singapore (MAS) clarified the new licensing requirements under the FSMA for digital token service providers (DTSPs). It also gave four weeks' notice of the requirements' commencement on June 30.

This regulatory update has prompted wide-ranging reactions across the crypto industry. Some reports have characterized this as a “crypto crackdown,” while some observers view it as a “step toward consistency.”

As the deadline nears, we unpack what the FSMA entails, how it affects crypto businesses, and whether it marks a crypto policy shift in Singapore.

What is the Financial Services and Markets Act (FSMA)?

Singapore enacted the FSMA in April 2022 as an omnibus legislation to streamline and strengthen MAS’ regulatory powers across the financial sector. 

For the crypto sector, the FSMA introduces a licensing regime for DTSPs that operate in or from Singapore, even if they only serve overseas markets. This expands the scope of regulation beyond the existing frameworks such as the Payment Services Act (PS Act), which focus on services provided to customers in Singapore.

Under the provisions taking effect on June 30, 2025, DTSPs with a substantive presence in Singapore — even if they do not serve local customers — must obtain a license and comply with anti-money laundering and countering the financing of terrorism (AML/CFT) requirements. 

However, MAS has no intention of licensing DTSPs under the FSMA. In its May 2025 consultation response, MAS emphasized:

“MAS is unlikely to approve any application by an entity to provide DT services from Singapore to only overseas persons, given the higher inherent ML/TF risks and the limited supervisory oversight MAS can exercise over such entities.”

"The most likely reason why a firm wants to target customers overseas but not onshore is to not be subject to the overseas regulatory regime," explains Brian Yeoh, an independent observer, and former regulator at MAS and Abu Dhabi Global Market. In other words, the intent of the FSMA is to prevent entities from using Singapore as a base to avoid regulation while targeting foreign markets.

It is problematic for MAS to license such firms, explains Yeoh, because "there is no practical way of monitoring what is happening on the ground overseas, and the benefit to Singapore and Singaporeans is at best limited. However, if and when something goes wrong, the overseas customers cannot look to their local regulator for recourse and instead will look to MAS."

How does the FSMA impact crypto businesses in Singapore?

The FSMA’s licensing regime broadens the territorial scope of crypto regulation in Singapore. Under the PS Act, only crypto firms serving Singapore customers needed a license. The FSMA extends licensing obligations to Singapore-incorporated crypto firms, as well as Singapore-based individuals and partnerships, regardless of customer location.

This change carries several implications:

• Crypto businesses incorporated in Singapore may fall within scope, even if they target only overseas clients.
• Entities must now evaluate their licensing obligations based on their presence in Singapore, not just customer location.
• Crypto businesses that previously operated from Singapore while serving only offshore clients — assuming they could avoid local licensing — must now either get licensed, or stop operating from Singapore. Since MAS is not minded to grant FSMA licenses, the only route to licensing is via other existing regimes such as the PS Act. 

MAS has included one important carve out: Singapore-based employees of overseas crypto business are not automatically considered licensable, so long as their activities do not amount to the provision of DT services from Singapore. This could allow support functions, which do not themselves constitute regulated services (e.g. engineering, product), to operate in Singapore without triggering licensing obligations, as long as the staff are employed by a foreign entity.

For employees involved in front office activities such as sales and business development, things are less clear cut. In its consultation response, MAS said that the location of such functions would be “relevant” to determining whether DT services are being provided in Singapore.

Firms that already hold a license under the PS Act or other relevant frameworks will also not be subject to FSMA licensing for those same regulated services.  

Finally, the new rules are not meant to introduce new types of regulated products and services. “If a firm had previously assessed that the types of services it provides does not fall within scope of regulation, the DTSP framework is unlikely to change that,” explained Hagen Rooke, Partner at Gibson, Dunn, and Crutcher’s Singapore financial regulatory practice. “For example, activities relating to payment token derivatives or lending that have to date been unregulated in Singapore will not become regulated when the DTSP framework takes effect.”

The same goes for decentralized finance (DeFi) projects. “In our experience, whether a DeFi project with operations in Singapore falls into the scope of regulation will depend mainly on the degree of control it can be seen to exercise over the protocol operations, and notably over user assets. This assessment will not change with, or be affected by, the introduction of the DTSP framework,” said Rooke.

Is Singapore changing its position on crypto?

The short answer? Not really. 

Angela Ang, Head of Policy and Strategic Partnerships, APAC at TRM Labs, explains: "This latest move—long signaled by MAS over the past three years—is consistent with the regulator’s broader approach to addressing the AML risks in the growing crypto economy.”

The DTSP licensing requirements simply give operational effect to a long-articulated policy stance. As Minister Alvin Tan explained during his April 2022 parliamentary speech on the legislation:

"MAS is committed to facilitating the growth opportunities presented by digital finance, and the cheaper and more convenient services it often brings for consumers, while guarding against new risks. These digital transformations could disrupt and challenge existing regulatory frameworks which were designed for more traditional forms of financial transactions and services. For example, digital token service providers could easily structure their businesses to evade regulation in any one jurisdiction, as they operate mainly online. We could be exposed to reputational risks brought by DT service providers created in Singapore, and which provide services relating to virtual assets such as Bitcoin outside Singapore. The [legislation] seeks to mitigate such risks by licensing these players and imposing AML/CFT requirements on them."

“Contrary to some reports, the implementation of DTSP licensing requirements is neither sudden nor unexpected,” noted Rooke. “In fact, a good number of crypto firms have already assessed their position and made preparations over the last few years.”

Ang emphasized: “The DTSP framework is aimed at a specific business model designed to circumvent regulation. Firms operating outside of that model should not be unduly concerned.”

What does the implementation of FSMA mean for Singapore's crypto hub?

Singapore is widely regarded as a leading crypto hub. Last year, MAS granted a record number of crypto licenses under the PS Act. Still, only 33 firms have made it through to date—just a small share of the hundreds that have applied.

The commencement of the new rules has undoubtedly thrown a renewed spotlight on Singapore’s attitude toward crypto and whether it remains a conducive jurisdiction for crypto firms to operate.

The reality on the ground has been mixed. Bloomberg reported that two major unlicensed crypto exchanges are reorganizing their Singapore teams, including moving staff to other jurisdictions. However, local news outlet CNA reported that staff from another major unlicensed crypto exchange have “not been significantly affected.” In a June 6 clarification, MAS said that it had engaged the “small number” of providers who were likely to be affected, to “clarify [its] policy position and to discuss their plans for an orderly wind-down of the activity.” These actions reflect MAS’ consultative approach to regulation, said Ang. “MAS typically engages industry stakeholders in advance of any change. Its goal is to avoid surprises and implement rules with a clear understanding of their potential impact.”

But the recent panic among industry players could suggest a need for stronger engagement and clearer messaging. “MAS has emphasized in its various comments and clarifications that the new rules have been a long time coming. However, it is clear from the industry response that something has been lost in translation,” opined Yeoh.

“To help allay concerns, a clarification such as ‘We understand that there will be significant impact on firms who have been caught off guard and will provide further clarification to them as they transit the relevant parts of their businesses out of Singapore,’ could have gone a long way.”

“Beyond the substance of the rules, perception can play a role,” added Yeoh. “Some firms could be making decisions to move out because they perceive Singapore as tightening its rules for crypto, even if they are not affected by the new FSMA rules.”

Still, we are unlikely to see an exodus of crypto firms from Singapore on June 30. “Regulation is only one facet of Singapore’s competitiveness as a crypto hub,” Rooke commented. “The industry is not going to decamp en masse overnight because of a single legislation.”

What lies ahead

MAS has made it clear: it will not stand for crypto firms using Singapore as a base to evade regulation while servicing other markets. 

But the FSMA’s actual impact on any given firm is highly fact-dependent. As Yeoh notes: “The real winners, as always, will be those firms that spend the time to do due diligence, to understand their operating context, and who focus on the signal and not the noise.”

In that sense, Singapore’s regulatory direction may not have changed — but for those in the industry, understanding and anticipating how it is applied has never been more important.

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Thinking of applying for a crypto license in Singapore? Check out our webinar on “The Journey to a Crypto License in Singapore,” where industry experts discuss their experiences.