Singapore's' extermination 'of Web3, end of regulatory arbitrage era, a Web3' big retreat 'is coming The Monetary Authority of Singapore (MAS) released a response document on May 30, 2025 regarding the new regulations for digital token service providers (DTSP), which many people have not yet realized will actually affect the overall landscape of the Web3 industry in Asia. The new regulations will officially come into effect on June 30, 2025, and MAS has clearly stated that there will be no buffer period! A large-scale 'Singapore Web3 retreat' may have quietly begun. When MAS openly expresses this attitude in this strongly worded consultation document, Singapore, once hailed as the "Asian crypto friendly paradise" by global Web3 practitioners, is bidding farewell to the past in a surprising way ——Not a gradual policy adjustment, but a near cliff like regulatory tightening. For those project parties and institutions that are still observing, this may no longer be a question of "whether to leave", but a choice of "when to leave" and "where to go". Past glory: the golden age of regulatory arbitrage Do you remember Singapore in 2021? When China completely banned cryptocurrency trading and the US SEC waved its regulatory stick around, this small island nation opened its arms to welcome Web3 entrepreneurs. Three Arrows Capital, Alameda Research, FTX Asia headquarters .. One resounding name after another chose to settle here, not only because of the 0% capital gains tax, but also because of the "embracing innovation" attitude demonstrated by MAS at that time. At that time, Singapore was known as the "regulatory arbitrage holy land" of the Web3 industry. By registering a company here, you can legally and compliantly provide digital asset services to global users outside of Singapore, while enjoying the reputation of Singapore's financial center. This business model of 'being in Singapore, caring about the world' once attracted countless Web3 practitioners. Nowadays, Singapore's new DTSP regulations mean that Singapore has completely closed the door to regulatory friendliness, and its attitude can be simply put as follows: --Expel all unlicensed individuals in the Web3 industry from Singapore. What is DTSP? The definition that makes people extremely fearful upon careful consideration DTSP stands for Digital Token Service Provider. According to Article 137 of the FSM Act and the content of Document 3.10, DTSP includes two types of entities: One Individuals or partnerships operating in Singapore's business premises; II Singaporean companies operating digital token services outside of Singapore (regardless of whether the company is from Singapore or elsewhere) This definition may seem simple, but in reality, it carries hidden dangers. Firstly, what is the definition of "place of business" in Singapore? The definition of "place of business" given by MAS is "any location in Singapore used by a holder to conduct business (including stalls that can be moved from one location to another)". Pay attention to several key points in this definition: 'Any location': No restrictions, must be a formal commercial venue Including stalls ": even mobile stalls are included, indicating the wide scope of supervision 'Used for conducting business': The key lies in whether business activities are conducted at that location Simply put, as long as you are not licensed in Singapore, there is a risk of violating the law when conducting any business involving digital assets in any location, whether you are a local Singaporean company or an overseas company, and whether you are targeting local Singaporean or overseas customers. So, is working from home illegal? Regarding this issue, Baker McKenzie Law Firm has submitted feedback to MAS in the document Baker McKenzie Law Firm specifically sought clarification from MAS regarding this issue: Considering the prevalence of remote work, is the policy intention of MAS to cover individuals employed by overseas entities but working from home or residential locations in Singapore? " The concerns of the law firm are very practical. They listed several possible scenarios for stepping on landmines: Individuals who provide DT services to overseas companies from home (possibly advisory in nature) Employees or directors of overseas companies working in Singapore under remote work arrangements But at the same time, law firms are also trying to provide some "protective talismans" for those working from home: Based on the drafting of current legislation, it can be argued that homes or residential places should not be included, as homes or residential places are usually not understood as places where the licensor conducts business However, MAS poured cold water on this issue: According to section 137 (1) of the Financial Services and Markets Act, all individuals engaged in the provision of digital token services outside of Singapore at a place of business in Singapore are required to obtain a DTSP license, unless the individual falls under a category of persons as defined in section 137 (5) of the Financial Services and Markets Act. In this regard, if an individual is located in Singapore and engages in the business of providing digital token services to individuals and non individuals outside of Singapore, they need to apply for a license under section 137 (1) of the Financial Services and Markets Act. However, if an individual is an employee of a foreign registered company that provides digital token services outside of Singapore, the work performed by the individual as part of their employment in the foreign registered company itself will not trigger a licensing requirement under section 137 (1) of the Financial Services and Markets Act. ” as well as However, if these individuals work in shared workspaces or in affiliated company offices of overseas entities, they are clearly more likely to be included in the scope To summarize, the new regulations are: -Without a license, neither individuals nor companies are allowed to conduct business targeting local or overseas customers in any business premises in Singapore -If you are an overseas employee, working from home is acceptable But the new regulations also have many ambiguous areas: -The definition of an employee in MAS is very vague. Does the project founder count as an employee and does holding shares count as an employee? MAS the final say -If you are a BD or sales representative of an overseas company and you go to someone else's shared office to discuss business, does it count as conducting business in the business premises? MAS the final say The vague definition of digital token services may also affect KOLs? The definition of digital token services by MAS covers an astonishingly wide range, encompassing almost all related token types and services. And even the publication of research reports is included in it? According to item (j) of the First Schedule of the FSM Act, the regulatory scope includes: Any services related to the sale or offer of digital tokens, including: (1) Provide advice related to digital tokens directly or through publications, articles, or any other form (electronic, printed, or otherwise). or (2) Provide recommendations related to digital tokens through publishing or disseminating research analysis or research reports (in electronic, print, or other forms)“ This may mean that if you, as a KOL or institution, release a report analyzing the investment value of a certain token in Singapore, theoretically you may need a DTSP license, otherwise you may be deemed illegal. The Blockchain Association of Singapore has raised soul searching questions to MAS regarding this issue in their feedback: Will traditional research reports be recognized as related to token sales or offers? How should participants distinguish research reports related to token sales or offers MAS has not provided a clear answer, and this ambiguity can be said to make all content creators walk on thin ice. Which groups may be affected? 🔴 Personal identity type (high-risk) Independent practitioners: including developers, project consultants, market makers, miners, and more Content creators and KOLs: including analysts 关键意见领袖 Community operation, etc Core personnel of the project: including the founder BD、 Sales and other core business personnel 🟠 Institution type (high-risk) Unlicensed exchanges: CEX, DEX Project partners: DeFi, wallets, NFTs, etc Conclusion: The End of Singapore's Regulatory Arbitrage Era A terrifying reality emerged: Singapore has come for real this time, and is going to 'blow' all non compliant people out of Singapore. As long as they are non compliant, almost any activity related to digital tokens may be included in the regulatory scope. Whether you are in a luxury office building or on a sofa at home, whether you are a CEO of a large company or a freelancer, as long as it involves digital token services. Due to the numerous gray areas and ambiguous definitions of "place of business" and "conducting business", MAS is likely to adopt a "case oriented" enforcement strategy - killing a few chickens first and then warning monkeys. Do you want to temporarily embrace compliance? Sorry, MAS has explicitly stated that it will approve DTSP licenses in an "extremely cautious" manner and will only approve applications in "extremely limited circumstances". In Singapore, the era of regulatory arbitrage has officially ended, and the era of big fish eating small fish has arrived. MAS file source: https://www.mas.gov.sg/publications/consultations/2024/consult-paper-dtsp