The Evolution of Web3 Regulatory Policies in Singapore: From Encouraging Innovation to Risk Prevention

In recent years, Singapore has played an important role in the global virtual currency and Web3 industry, attracting numerous companies to settle there. However, this country, once hailed as the "Crypto Capital of Asia," is gradually adjusting its regulatory strategy, shifting from early encouragement of innovation to a more risk-averse and prudent approach.

Initial Stage: Open and Inclusive, Encouraging Innovation

In 2019, Singapore launched the Payment Services Act, which provided a clear legal framework for digital payment token services. The Monetary Authority of Singapore actively supports technological innovation and has promoted several experimental projects exploring central bank digital currencies and tokenized assets. During this period, Singapore provided valuable development opportunities for Web3 startups, allowing them to boldly experiment as long as they do not cross regulatory boundaries.

Turning Point: Major Project Failures Trigger Regulatory Tightening

In 2022, the collapse of Three Arrows Capital in Singapore and the FTX bankruptcy event drew significant attention from regulators. To maintain the reputation and stability of the national financial center, Singapore quickly took action. On one hand, it strengthened the regulation of cryptocurrency service providers and introduced stricter Financial Services and Markets Act; on the other hand, it also began to restrict retail investment to prevent excessive speculation.

Retail Investors: Strict Restrictions, Advocating Rationality

At the end of 2023, the regulatory guidelines issued by the financial management bureau imposed clear restrictions on retail investors. The new regulations prohibit cryptocurrency service providers from offering any form of rewards to retail investors, such as cashback, airdrops, or trading subsidies. At the same time, it also prohibits features that may amplify risks, such as leverage and credit card deposits. In addition, it requires assessing users' risk tolerance and setting investment limits based on net asset value. These measures aim to cultivate a rational investor community rather than encourage speculative behavior.

Service Providers: Strict Entry Standards, Survival of the Fittest

By June 30, 2025, all enterprises that have not obtained a digital token service provider license will be required to cease providing services to overseas clients. Currently, only a few leading enterprises, such as a well-known exchange and a stablecoin issuer, have been approved. There are also some enterprises in an exemption status, which have either passed strict anti-money laundering and risk assessments or have a high level of cooperation and compliance background. Other enterprises face the choice of either moving to other markets or accelerating their compliance processes.

Fund Management: Increasing Professional Requirements

Singapore, as a traditional fund hub in the Asia-Pacific region, is integrating virtual assets into formal fund management processes. The Monetary Authority of Singapore stipulates that even if only serving "qualified investors," cryptocurrency fund managers must possess the corresponding qualifications. This includes risk hedging capabilities, client asset identification, establishment of internal risk control processes, and even anti-money laundering reporting mechanisms. This means that the era of establishing a fund simply by relying on a few industry well-known figures and a business plan is over.

Conclusion: Regulatory Upgrade or Industry Evolution?

Although some believe that Singapore is no longer the "paradise" of Web3, from another perspective, this is actually the normal evolution of regulation. The transition from allowing trial and error to regulating order is a necessary path for emerging markets to mature. Current Singapore may no longer welcome participants with a short-term speculative mindset, but for teams with genuine technical strength and long-term planning, it remains one of the most attractive markets in the world.

However, there are also views that the Web3 industry is still in its early development stage, and implementing strict regulations too early may stifle innovation. Finding a balance between promoting healthy industry development and protecting investor interests will be an ongoing challenge for Singapore.