On 30 May 2025, the Monetary Authority of Singapore (MAS) announced that the Financial Services and Markets Act 2022 (FSMA) provisions on digital token service providers (DTSPs) will come into force on 30 June 2025, including licensing requirements for DTSPs and the Financial Services and Markets (Digital Token Service Providers) Regulations 2025 (DTSP Regulations).  MAS also released the Guidelines on Licensing for Digital Token Service Providers (Guidelines).

Under the FSMA, the following DTSPs require a licence (Licensable DTSPs):

• individuals or partnerships that, from a Singapore place of business, carry on a business of providing a digital token service outside of Singapore; and

• Singapore corporations that carry on a business, whether from Singapore or elsewhere, of providing a digital token service outside Singapore,  

unless they are licensed or exempted from licensing under the Payment Services Act 2019, Securities and Futures Act 2001 and/or the Financial Advisors Act 2001, or are exempt from licensing under the FSMA.

In this regard, a “digital token service” refers to providing any of the following services:

• dealing in digital tokens;  

• facilitating the exchange of digital tokens;

• accepting digital tokens from a digital token account (in Singapore or elsewhere) to transmit them to another digital token account (in Singapore or elsewhere), or arranging for this transmission;

• inducing or attempting to induce a person to agree to buy or sell digital tokens for money or digital tokens;

• safeguarding digital tokens or a digital token instrument, where the service provider has control over the digital tokens or the digital tokens associated with the digital token instrument (as the case may be);  

• carrying out instructions relating to digital tokens or digital tokens associated with a digital token instrument, where the service provider has control over the digital tokens or digital token instrument (as the case may be); or  

• selling digital tokens or offering them for sale, where a financial advisory service is provided.

For this purpose, a “digital token” is a digital payment token (e.g., Bitcoin) or a digital representation of a capital markets product (e.g., tokenised stocks), but does not include utility or governance tokens.

When the new regulatory regime comes into force on 30 June 2025, Licensable DTSPs must cease carrying on a business of providing digital token services outside Singapore, unless they obtain an FSMA DTSP licence.

Licensing Guidelines

Because Licensable DTSPs are at risk of being misused for money laundering (ML), terrorism financing (TF) and other illicit purposes, MAS will only grant an FSMA DTSP licence under extremely limited circumstances, including where:

• the applicant can satisfy MAS as to why it only provides services overseas despite being based in Singapore;  

• the applicant poses no regulatory concern to MAS and is already supervised under internationally accepted standards; and  

• MAS does not have concerns with the applicant’s business structure or its ability to comply with regulatory requirements.

An applicant will be expected to fulfil licensing requirements including:

• compliance with the fit and proper criteria;

• maintenance of a base capital of at least S$250,000; and

• submission of a legal opinion that assesses whether the applicant is regulated under the FSMA.

An applicant will also be required to comply with ongoing requirements, including compliance with MAS notices on ML/TF, suspicious transaction reporting and technology risk management.

Conclusion

Digital token companies based in Singapore that offer services outside of Singapore should immediately review their operations to determine if they are a Licensable DTSP.  MAS has made clear in its communications that Licensable DTSPs will not be granted any transition period to comply with the licensing requirement by 30 June 2025.  As MAS has reiterated that licences will only be granted in “extremely limited circumstances”, Licensable DTSPs should ensure they devote adequate attention to preparing their submissions.

For More Information

OrionW regularly advises clients on fintech and financial regulatory matters.  For more information about this, or if you have questions about this article, please contact us at fintech@orionw.com.  

Disclaimer: This article is for general information only and does not constitute legal advice.