The Monetary Authority of Singapore (MAS) announced the results of one of its latest consultations that impacts Singapore crypto and stablecoin firms that essentially operate offshore. These businesses may be incorporated in Singapore but must cease operations by the end of the month (30 June 2025) or get a license, which MAS said will only be granted rarely.
The move stems from legislation that splits the licensing of ‘digital token service providers’ into those that provide services in Singapore versus others that target offshore clients. Service providers active in Singapore have to be licensed in accordance with Payment Services Act, whereas those that target offshore clients fall under the Financial Services and Markets Act.
MAS is concerned about the potential reputational impact on Singapore where companies register in Singapore for tax purposes, but don’t actually provide services within Singapore or have a material presence. Money laundering is a key worry, especially if the main operations are outside of Singapore, making it hard for MAS to exercise oversight. This supervision challenge is why MAS will rarely grant licenses to offshore-focused firms – without Singapore touchpoints, effective regulation becomes nearly impossible.
As a result of the two pieces of legislation, MAS has implemented two sets of regulations. The payment services licenses for digital tokens in Singapore have been operational for some time, while the offshore regulations were not implemented until now. When MAS consulted in October it warned that there would not be a lengthy transition period, presumably to encourage firms to start bringing operations onshore and get a license, or leave Singapore altogether.
Several high profile firms such as Circle and Paxos already have licenses as Major Payment Institutions and have Singapore operations, so would be unaffected by these new regulations.
In or outside Singapore?
On LinkedIn, lawyers from Gibson Dunn have debated the nuances of what it means to be ‘in Singapore’ versus ‘outside Singapore’, noting that it’s not just a matter of servicing Singapore customers, but also having operations within Singapore – reinforcing MAS’s position on the supervision requirements.
