The Singapore Financial Services and Markets Act is about to take effect, and the digital asset industry is facing strict regulation.

With less than a month to go until June 30, 2025, Singapore's Financial Services and Markets Act (FSMA) will officially come into effect, establishing strict regulations for the digital asset industry. The legislation aims to uphold Singapore's reputation as a global financial center.

The FSMA mainly targets Digital Token Service Providers (DTSP), including services such as trading, transferring, exchanging, custody, and consulting of digital tokens. Since these services often involve online cross-border operations, they can easily be exploited by criminals for money laundering or financing terrorist activities.

The Monetary Authority of Singapore (MAS) has decided to strictly regulate DTSPs, requiring them to obtain a license and comply with high standards of compliance. Businesses that fail to obtain a license may be ordered to cease operations.

In response to industry concerns, MAS provided a detailed reply on June 6:

1. Companies that are registered or established with only tax resident status or high-level executives, if they actually provide overseas DT services, still need to apply for a license.

2. Whether working from home constitutes a place of business depends on the substance of the business. If substantial business activities are conducted at home, it may be regarded as a place of business.

3. The threshold for applying for a DTSP license is relatively high, and the MAS only issues licenses in very few cases. Starting from June 30, 2025, unlicensed DTSPs must cease overseas services.

4. The license application fee and annual fee are both 10,000 SGD, and the company needs to prepare a capital of 250,000 SGD. MAS stated that these requirements will not change.

5. Companies with a business location or registered in Singapore that provide overseas DT services must apply for a license.

6. After obtaining the license, it is necessary to conduct customer due diligence (CDD) on existing clients again. The completion time will be determined by MAS based on client risk.

7. Third parties can be entrusted to conduct CDD, but they cannot be payment service companies. Enterprises need to assess the reliability of third parties themselves.

8. Account services and transfers must comply with strict regulations, including anti-money laundering measures and complete transaction information.

9. Technical risks and cybersecurity requirements are strict, and major incidents must be reported to MAS within 1 hour.

10. Behavioral and disclosure requirements include recording transactions, issuing receipts, disclosing exchange rates and fees, etc.

11. MAS will consider publishing a dedicated FAQ for DTSP, but the guidance will remain principled.

12. The FSMA imposes higher compliance requirements on all DTSP-related businesses, including technology risk management, annual audit reports, AML/CFT requirements, etc.

Institutions that already hold licenses under the Payment Services Act, Securities and Futures Act, or Financial Advisers Act, or are exempted, do not need to apply for a DTSP license under the FSMA.

In response to these regulatory changes, the industry advises companies to conduct immediate self-assessments, strengthen compliance, maintain communication with MAS, and closely monitor subsequent guidelines. Companies of different sizes and types may need to adopt different response strategies, including applying for licenses, adjusting business models, or seeking exemptions.