Author: FinTax

IV. Basic Research on Cryptocurrency Regulation in Singapore

(1) Basic Framework

In recent years, Singapore has continuously strengthened and improved the regulatory framework for cryptocurrency assets, gradually forming a legal framework centered around the Payment Services Act (2019, PSA) and the Financial Services and Markets Act (2022, FSMA). The former establishes licensing management for Digital Payment Token (DPT) services, anti-money laundering and counter-terrorism financing (AML/CFT) requirements, and operational compliance obligations; the latter supplements regulations on market integrity, cross-border cooperation, and enforcement authority within a broader range of financial services. These two laws interconnect, providing clear legal bases and compliance boundaries for the issuance, trading, custody, payment, and related services of cryptocurrency assets.

Under this framework, the Monetary Authority of Singapore (MAS) has significantly tightened licensing issuance and business conduct regulations in recent years, accompanied by strict enforcement. With the key licensing provisions of the FSMA coming into effect this year, MAS requires all cryptocurrency companies with entities established in Singapore that only serve overseas clients to obtain licenses within a specified period, or face hefty fines and criminal liability; the trading platform Tokenize Xchange announced its exit from the Singapore market due to obstacles in its license application and shifted its business to Malaysia and Abu Dhabi; meanwhile, Binance chose to retain its local team to continue advancing its license application, while Bitget, Bybit, and others are considering relocating some operations to regions with relatively loose regulations.

(2) Key Provisions

The PSA is the first comprehensive regulation systematically incorporating Digital Payment Token (DPT) services, aimed at addressing the payment and capital flow risks brought about by the rise of financial technology (FinTech) and cryptocurrency assets.

The law adopts a "functional regulation" approach, meaning that regardless of the technological form, any activity involving capital flow and payment functions falls under regulatory scope. Specifically, the PSA categorizes payment services, establishing a category specifically for "Digital Payment Token Services," covering various business activities such as the exchange of tokens for fiat currency, exchange between tokens, token custody, wallet services, and intermediary matching. This system directly requires all relevant institutions to apply for licenses before entering the Singapore market, with common license types including Standard Payment Institution licenses and Major Payment Institution licenses. The former is suitable for smaller-scale businesses, while the latter imposes higher requirements on capital, risk management, and compliance levels. To prevent systemic risks, the PSA also establishes strict compliance and business supervision requirements, such as customer identity verification (KYC), AML/CFT procedures, customer fund protection and segregation measures, prohibitions on misleading advertising and market manipulation, and the requirement to submit regular business and financial reports to the MAS. In recent years, as application thresholds have tightened, many internationally renowned trading platforms (such as Binance, Bybit, Crypto.com, etc.) have faced strict scrutiny in their license applications, with some even exiting the Singapore market, reflecting the PSA's "high threshold, strong regulation" institutional orientation.

The FSMA primarily addresses the shortcomings of the PSA in cross-border business, market integrity, and enforcement.

As Singapore gradually becomes a regional cryptocurrency hub, a large number of overseas service providers offer DPT services to Singapore residents online, leading to the emergence of the FSMA, which further expands regulatory reach. Its key provisions include: first, cross-border regulation, clarifying that even if a company operates overseas, as long as it provides relevant services to Singapore customers, it must comply with local regulations, or face criminal or civil penalties; second, market integrity, granting MAS greater power to combat market manipulation, false statements, insider trading, and other behaviors to maintain market credibility; third, AML/CFT, requiring both domestic and foreign service providers to meet international standards, strengthening cross-border information disclosure and reporting mechanisms; fourth, enforcement authority, granting MAS the power to impose fines, injunctions, business restrictions, and even criminal prosecutions. These provisions directly change the industry landscape; on one hand, some unlicensed overseas exchanges are forced to exit due to their inability to legally reach Singapore customers, while on the other hand, licensed institutions must meet higher capital and transparency requirements, such as establishing more robust internal compliance systems and risk control frameworks. It is worth mentioning that some key provisions in the FSMA have been implemented in phases after their release, with all provisions effective by June 30, 2025.

(3) Specific Details

1. Licensing

Singapore implements a strict licensing and permit management system for Digital Payment Token Service Providers (DPTSP), primarily based on the Payment Services Act (2019, PSA) and its amendments, as well as the relevant provisions in Part 9 of the Financial Services and Markets Act (2022, FSMA).

DPT Licensing System under PSA

According to the PSA, the sixth category "Digital Payment Token Services" is officially included in the regulatory scope, covering the exchange between digital payment tokens and fiat currency, exchange between tokens, token custody, wallet services, and intermediary matching. Institutions providing the above services must apply for one of the following two types of licenses:

• Standard Payment Institution License (SPI): Suitable for small to medium-sized DPTSPs. Application conditions include: registered as a Singapore company, having a local business premises with records available for regulatory inquiry, at least one member of management being a Singapore citizen, permanent resident, or holder of an employment pass; a minimum registered capital of SGD 100,000, and possessing risk management capabilities commensurate with the business scale.

• Major Payment Institution License (MPI): Suitable for enterprises with high transaction volumes or involving multiple payment services. This license has higher requirements, typically including larger capital reserves, customer fund segregation, and security assurance mechanisms.

In 2023, MAS further strengthened application requirements, mandating that all companies applying for new licenses or changing licenses to add DPT services must submit a legal opinion issued by a professional law firm, clearly outlining the business model and whether the relevant services are governed by the PSA; additionally, a compliance assessment report completed by an independent external audit firm must be attached, covering business compliance and AML/CFT mechanisms.

FSMA's DTSP Extended Regulation

Part 9 of the FSMA introduces a licensing system for Digital Token Service Providers (DTSP), aimed at filling the regulatory gap in cross-border business oversight under the PSA. Starting from June 30, 2025, any Singapore-registered company or institution with a substantial operational presence in Singapore providing digital token services to overseas clients must apply for a DTSP license.

MAS has indicated that the money laundering risks associated with this DTSP model are high and regulatory challenges are significant, thus such licenses are rarely approved, effectively closing regulatory arbitrage gray areas. Even in the rare cases where licenses are issued, they must strictly comply with a series of standards, including AML/CFT checks, cross-border information sharing, and technical and business compliance.

Whether under the PSA or FSMA licensing systems, both aim to ensure that digital payment token services operate under high-standard regulation in Singapore through high-threshold licenses, strict compliance requirements, and prevention of regulatory arbitrage. These measures help maintain financial stability and market integrity, while also clarifying the entry boundaries for legitimate operators.

2. Stablecoins

Singapore is the first in the world to launch a dedicated regulatory framework for stablecoins, with the MAS releasing the Regulatory Framework for Stablecoins in August 2023, which will take effect in October 2024 through amendments to the Payment Services Act (PSA) and accompanying subsidiary legislation. This framework primarily targets "Qualified Stablecoins" (Single-Currency Stablecoins, SCS), aiming to ensure user fund safety, enhance transparency, and boost market confidence.

According to MAS regulations, only stablecoins that meet the following conditions can be recognized as "Qualified Stablecoins" (MAS-regulated Stablecoins):

• Anchor Object: Must be fully pegged and redeemable 1:1 for Singapore dollars (SGD) or legal tender of G10 currencies;

• Issuing Institution: Limited to issuers registered and regulated in Singapore;

• Issuance Scale: Must have a circulation scale of at least SGD 5 million to fall under mandatory regulatory scope;

• Payment Attributes: Must primarily be used as a payment tool, rather than a speculative investment token.

To ensure the redemption capability of stablecoins, regulators require that qualified stablecoins must have sufficient high-quality reserve assets:

• 100% Reserve Backing: The total issuance must be fully backed by low-risk, highly liquid assets (such as cash, treasury bills);

• Custody Requirements: Reserve assets must be held in regulated financial institutions (banks or custodians) and segregated from the issuer's own funds;

• Regular Audits: Issuers must publicly disclose reserve reports monthly and undergo annual audits by independent audit firms to ensure sufficiency and transparency.

Stablecoin issuers must fulfill a series of information disclosure and risk management obligations:

• White Paper Disclosure: Must publish a detailed white paper outlining governance mechanisms, reserve arrangements, clearing and redemption rules;

• Risk Warnings: Clearly inform users that stablecoins are not risk-free and carry market liquidity and technical risks;

• Redemption Obligations: Must commit to redeeming at a 1:1 ratio within a reasonable time (usually within 5 working days);

• Prohibition of Mixed Issuance: The same institution must not issue both regulated and unregulated stablecoins simultaneously to prevent confusing investors.

MAS's goal in promoting stablecoin regulation is to establish a "trustworthy category of stablecoins" in the market. Qualified stablecoins will enjoy higher recognition in payment systems and financial applications, and MAS also plans to allow these stablecoins to interoperate with traditional electronic payment systems. In contrast, stablecoins that do not meet the criteria (such as tokens pegged to non-G10 currencies) cannot be advertised as MAS-regulated stablecoins and may face stricter advertising and usage restrictions.

3. Compliance and Reporting

In Singapore, cryptocurrency service providers (DPTSP) not only need to obtain licenses but must also comply with strict compliance and reporting obligations. These requirements primarily stem from the Payment Services Act (PSA), the Financial Services and Markets Act (FSMA), and relevant MAS guidelines, focusing on KYC/AML processes, transaction record retention, and suspicious transaction reporting.

DPT service providers are required to implement comprehensive customer due diligence (CDD) and ongoing monitoring measures:

• Identity Verification (KYC): Before opening an account or conducting large transactions, customer identity must be verified, collecting information such as name, address, and identification documents (PSA §23, FSMA §36);

• Risk-Based Management: Service providers must implement differentiated due diligence measures based on customer risk levels (high-risk customers such as cross-border fund movers, politically exposed persons (PEPs));

• Ongoing Monitoring: Continuously monitor customer transaction patterns, and if abnormal transaction patterns are detected, investigations must be intensified and records retained.

All transactions and customer information related to DPT must be fully recorded by service providers for future regulatory review or enforcement:

• Retention Period: At least 5 years (PSA §47);

• Record Scope: Includes transaction date, amount, counterparty identity, payment tools, and explanations of fund sources and uses;

• Electronic Archiving Requirements: Electronic systems may be used for storage, but data authenticity, integrity, and traceability must be ensured.

According to Singapore's Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and the Terrorism (Suppression of Financing) Act (TFA), all DPT service providers have an obligation to report suspicious transactions:

• Trigger Conditions: If a service provider knows or suspects that a transaction involves money laundering, terrorist financing, or other illegal activities, they must submit a suspicious transaction report to the Singapore Financial Intelligence Unit (STRO, Suspicious Transaction Reporting Office) within 15 working days;

• Criminal Liability: If reporting is not done as required, both the institution and responsible individuals may face criminal liability (CDSA §39, TFA §8);

• International Cooperation: MAS shares some STR data with overseas regulatory agencies for cross-border enforcement cooperation.

Through compliance and reporting mechanisms, Singapore ensures the transparency and traceability of the DPT market. KYC/AML processes can prevent anonymous transactions from concealing illegal capital flows; transaction record retention provides evidence for subsequent audits and regulatory investigations; and suspicious transaction reporting offers an early warning mechanism for combating cross-border money laundering and terrorist financing. The combination of these three elements has established a relatively strict compliance baseline for cryptocurrency assets in Singapore on a global scale.

4. Investor Protection

In Singapore, financial regulatory authorities not only focus on financial stability and compliance obligations but also place a high emphasis on investor protection related to cryptocurrency assets. Core requirements are reflected in advertising restrictions, risk warning obligations, and prohibitions on misleading statements. These mainly stem from the Financial Services and Markets Act (FSMA 2022), the Payment Services Act (PSA 2019), and specific guidelines issued by MAS (especially the MAS 2022 "Advertising Guidelines for Digital Payment Token Service Providers").

MAS explicitly requires that DPT service providers must not promote their services to the retail public through exaggerated returns or improper channels:

• Restricted Channels: Promotion of DPT services is prohibited in public places (such as subways, bus stops, shopping malls) or at events with high public contact;

• Advertising Media: The use of gifts, lotteries, airdrops, and other methods to attract public participation is not allowed;

• Permitted Channels: Information disclosure is only allowed through the provider's official website, mobile applications, or official social media pages.

All DPT service providers must prominently display risk warnings in customer interfaces to ensure investors understand the high-risk nature of digital assets:

• Warning Content: Must state "Cryptocurrencies are not suitable for all investors, their value may fluctuate significantly and may result in total loss";

• Presentation Method: The warning must be clear and visible, not hidden in lengthy documents or small print;

• Special Protection for Retail Investors: For first-time trading customers, service providers must conduct a suitability assessment to confirm their risk tolerance.

DPT service providers must adhere to the principles of truthful, complete, and non-misleading statements:

• Prohibited Actions: Misleading terms such as "guaranteed returns," "zero risk," and "capital protection" must not be used;

• Information Disclosure: Complete, accurate, and easily understandable explanations must be provided regarding product terms, fees, custody arrangements, and clearing mechanisms;

• Consequences of Violations: If misleading statements are provided, MAS has the authority to revoke licenses, impose hefty fines, and in severe cases, pursue criminal liability.

The core logic of Singapore's investor protection mechanism lies in suppressing improper promotion, enhancing risk awareness, and ensuring truthful disclosure. MAS emphasized in 2022 that cryptocurrencies should not be promoted as a "shortcut to wealth" but should guide market participants to rationally recognize risks. This series of measures has made Singapore one of the first jurisdictions globally to impose strong regulations on cryptocurrency advertising and risk warnings, effectively reducing the risk of significant losses for retail investors due to information asymmetry and market speculation.

Overall, Singapore's regulatory orientation consistently reflects a compliance-first logic. The regulatory authorities have established a clear legal framework, supplemented by detailed execution standards, systematically incorporating cryptocurrency asset businesses into the existing financial governance system. International media and industry generally believe that this institutional arrangement effectively enhances market transparency and consolidates Singapore's reputation as a compliant global financial center. However, at the same time, high-threshold compliance requirements have objectively prompted some companies to relocate to jurisdictions with more lenient regulations, such as Hong Kong or Dubai. Thus, Singapore is gradually forming a benchmark image of strict regulation in the global cryptocurrency governance landscape: in the short term, it may suppress market expansion and innovation vitality, but in the long term, it helps shape a stable, secure, and sustainable market environment. In summary, this section has systematically summarized the relevant regulations and regulatory practices, with key threads clearly presented; for more detailed provisions, please refer to the original texts of the PSA and FSMA.

5. Conclusion

Overall, Singapore has established a relatively complete dual framework of taxation and regulation in cryptocurrency asset governance.

In terms of taxation, the government has consistently maintained that cryptocurrencies are not considered legal tender, thus daily use primarily falls under income tax and goods and services tax (GST) rules: whether through trading profits, using tokens to pay for goods and services, or issuing and exchanging digital tokens, there are clear taxable and tax-exempt boundaries. Since Singapore does not have a capital gains tax, selling purely due to the appreciation of cryptocurrency assets is usually not taxed, keeping its tax regime relatively straightforward.

In terms of regulation, Singapore adheres to a compliance-first approach, establishing a legal system centered around the Payment Services Act (PSA 2019) and the Financial Services and Markets Act (FSMA 2022), which sets forth detailed rules for licensing, stablecoin management, compliance and reporting, and investor protection. The Monetary Authority of Singapore (MAS) ensures that the market operates under high transparency and high-threshold conditions through strict enforcement and ongoing guidance. Although some companies have chosen to shift to relatively lenient jurisdictions like Hong Kong or Dubai due to costs and restrictions, Singapore has gained global recognition as a model of high-standard regulation, providing institutional guarantees for the long-term sustainable development of the market.

Looking globally, Singapore's path highlights a combination model of clear taxation and strict regulation: compared to the fragmented regulation in the United States, the EU's gradual advancement of the Markets in Crypto-Assets Regulation (MiCA), and the UK's lag in stablecoin regulation, Singapore has established a more complete institutional framework. This high threshold may suppress business expansion in the short term, but in the long run, it provides replicable experience for integrating cryptocurrency assets into the traditional financial system through a transparent and stable institutional environment.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。