Singapore's Web3 Regulation Tightens: The Real Situation and Future Outlook for Practitioners

June 30, 2025, is an important date for practitioners in the Web3 space in Singapore. Starting from this day, according to Section 137 of Singapore's Financial Services and Markets Act (FSMA), all individuals or companies with a place of business in Singapore that provide digital token-related services, regardless of whether their clients are in Singapore, must obtain a Digital Token Service Provider (DTSP) license, or they will face criminal liability.

The Monetary Authority of Singapore (MAS) clearly stated in its regulatory response document released on May 30 that unlicensed entities must immediately cease overseas operations and that applications in progress will not be accepted as a basis for legal existence. This move has been interpreted by many as "the strictest cryptocurrency regulation to date."

To gain a deeper understanding of the overlooked key points in the FSMA document, we consulted professional legal opinions. At the same time, we interviewed five practitioners working in Singapore, trying to restore the true situation of local Web3 practitioners and understand their views on regulatory changes in Singapore.

1. Core Points of the Overlooked Bill

Through discussions with experts in digital economy law, we have identified the following bill contents that are worth readers' attention:

1. The FSMA is not only a supplementary regulation for overseas operations but also a comprehensive upgrade, with both domestic and foreign businesses being subject to constraints. This means that regardless of whether the business is aimed at the domestic or foreign market, as long as there is a place of business in Singapore or a company registered in Singapore, it must comply with the FSMA. This marks the official start of MAS's comprehensive regulation of local Web3 practitioners.

2. The regulatory focus has shifted from "institutional licenses" to "individual reviews." The FSMA has introduced regulatory mechanisms for individuals, allowing the MAS to directly intervene and isolate high-risk individuals in the financial markets. This means that even freelancers, remote developers, consultants, or opinion leaders who are not in management positions, as long as they provide relevant services within Singapore, may be recognized as regulatory subjects by the MAS.

3. The threshold for FSMA has significantly increased, with compliance requirements far exceeding those of PSA. Even if one already holds a PSA license, it cannot be automatically applied. Applying for a DTSP license not only requires an initial capital of 250,000 SGD and a resident compliance officer, but also necessitates the establishment of an independent audit mechanism, regular submission of compliance reports, and meeting the requirements of anti-money laundering and counter-terrorism financing processes and management systems.

2. The Real Voices of Web3 Practitioners in Singapore

Despite the increasing regulatory pressure causing stress and concerns for Web3 practitioners, the reality presents a diversified picture. From startup teams choosing to relocate, to individual workers taking a wait-and-see approach, to experienced practitioners who remain optimistic about Singapore's long-term development potential, their stories outline a true landscape of policy implementation:

1. The founder of the tokenized operation project stated that Singapore may no longer be suitable for the development of early-stage projects, but small businesses always have their own way of survival. They do not rule out the possibility of moving away from Singapore in the future, but remain optimistic in the face of change.

2. A practitioner with many years of experience in OTC trading believes that Singapore's regulation is essentially pragmatic. He thinks this regulation is more like "a lot of noise but little rain", and its main purpose is to scare the tiger by shaking the mountain; truly capable enterprises and individuals will not be overly anxious.

3. A practitioner who has been deeply involved in the Web3 and AI fields in Singapore for many years emphasized that Singapore's governance style has always been centered on pragmatism. He observed that many freelancers and remote workers are increasingly inclined to work from home and avoid discussing Web3-related topics in public to reduce risks.

4. An entrepreneur who has lived in Singapore for nearly 20 years believes that Singapore's Web3 regulatory policies have not undergone a drastic shift, but rather a clarification and refinement of the existing framework. He emphasized that Web3 remains a part of Singapore's national strategy, and the government is promoting ecological development in various ways.

5. A founder of an AI startup stated that the current regulatory changes have a limited impact on small teams like theirs. He believes that Singapore remains a fair, open, and rational place to view innovation, particularly suitable for small teams and individual entrepreneurs.

Overall, the tightening of regulations this time is essentially a self-adjustment by Singapore as an international financial center, rather than a comprehensive expulsion of the Web3 industry. Web3 practitioners are reassessing their options: to stay and accept stricter regulations in exchange for long-term policy stability, or to shift to markets that appear more friendly but may have more uncertainties. Regardless, Singapore's important position in the global Web3 ecosystem will continue, and the evolution of its regulatory policies will continue to influence the development direction of the global crypto industry.