TRW & Co · Financial regulation and fintech
Digital Token Service Provider Licensing Under FSMA in Singapore
A DTSP licence in Singapore is needed by Singapore companies, and individuals or partnerships operating here, that provide crypto or tokenised-asset services only to overseas customers. Part 9 of the FSMA took effect on 30 June 2025 with no transition period, and MAS has said it will generally not grant licences. Most affected businesses must restructure or wind down.
Key pointThe decisive question is rarely how to apply for a DTSP licence: MAS has said it will generally not grant one. It is whether the business is caught at all, and if so whether a licence under the Payment Services Act or Securities and Futures Act, an offshore restructuring or an orderly wind-down is the realistic path.
At a glance
In force since 2025
Part 9 of the Financial Services and Markets Act 2022 took effect on 30 June 2025, with no transitional arrangement for existing overseas-only token businesses.
Who is caught
Singapore-incorporated companies, and individuals or partnerships operating from a place of business in Singapore, providing digital token services solely outside Singapore.
Tokens in scope
Digital payment tokens, including stablecoins, and tokens of capital markets products such as tokenised shares, debentures or fund units. Pure utility and governance tokens fall outside.
MAS licensing stance
MAS has set a high bar and will generally not issue a licence, citing higher money laundering risk and its inability to supervise activity conducted outside Singapore.
Existing licensees unaffected
Firms licensed or exempt under the Payment Services Act, Securities and Futures Act or Financial Advisers Act may continue serving overseas customers for the same activities.
Swipe or scroll →
The short answer: who needs a DTSP licence in Singapore
As of October 2026, a DTSP licence in Singapore is required by a Singapore-incorporated company, or an individual or partnership operating from a place of business in Singapore, that carries on a business of providing digital token services solely to customers outside Singapore. The requirement comes from Part 9 of the Financial Services and Markets Act 2022 (FSMA), which took effect on 30 June 2025.
The practical answer is blunter. The Monetary Authority of Singapore (MAS) has said publicly that it has set the bar high and will generally not issue a licence. In its media release of 6 June 2025, MAS explained that money laundering risks are higher in these business models and that it cannot supervise effectively when the substantive activity takes place outside Singapore. There was no transitional period: affected businesses had to cease their overseas-only token services when the provisions commenced, unless licensed.
So the real question for most founders and group counsel is not how to apply. It is whether the business is caught at all, whether it is already covered by an existing licence or exemption, and, if it is caught, how to restructure or wind down in an orderly way. This article explains each of those questions and the common mistakes we see.
What changed on 30 June 2025 and why
Before Part 9 commenced, Singapore's crypto regulation largely followed the customer. A business offering digital payment token services to people in Singapore needed a licence under the Payment Services Act 2019; one dealing in tokenised securities needed a capital markets services licence under the Securities and Futures Act 2001. A firm incorporated in Singapore that served only foreign customers could sit in a gap between those regimes.
The Financial Action Task Force (FATF) standards on virtual asset service providers expect jurisdictions to regulate providers created in their territory, regardless of where customers are. Part 9 of the FSMA closes Singapore's gap. It applies to digital token service providers (DTSPs) that are formed in Singapore, or operate from a place of business here, and provide services outside Singapore.
MAS consulted on the regime in February 2022 and October 2024 and published its response to consultation feedback on 30 May 2025. It says it has communicated its licensing stance consistently since 2022. Firms that ignored those signals found that the regime commenced with only weeks of formal notice and no grace period.
Which tokens are in scope
Part 9 covers two families of digital token. The first is digital payment tokens, which includes the familiar cryptocurrencies and single-currency stablecoins. The second is tokens of capital markets products, such as tokenised shares, debentures or units in a fund. MAS has confirmed that providers dealing only in other tokens, such as pure utility or governance tokens, are not subject to licensing under the new regime.
Conventional securities that are not in token form fall outside Part 9 altogether, although the Securities and Futures Act may still apply. Whether a particular token is a payment token, a capital markets product or neither is a classification question that should be answered before anything else, because it determines which regime is relevant.
The legal framework for a DTSP licence in Singapore
Part 9 of the FSMA sits alongside, not on top of, the existing licensing Acts. MAS describes those existing Acts as the Payment Services Act 2019, the Securities and Futures Act 2001 and the Financial Advisers Act 2001. Persons already licensed or exempt under those Acts for a given activity are generally not required to obtain a DTSP licence in Singapore for the same activity, and MAS has said there is no change to what licensed providers can do, including serving overseas customers.
Carrying on a business of providing digital token services without a licence, where one is required, is an offence under the FSMA. The Act provides for fines and imprisonment. Because the penalty applies to individuals as well as companies, founders who personally run token businesses from Singapore need to take the regime seriously even where the corporate vehicle is offshore.
The services covered
Broadly, the digital token services caught by Part 9 mirror those regulated under the existing Acts. Published commentary and MAS materials describe them as including:
- dealing in digital tokens, that is buying or selling them in exchange for money or other tokens;
- operating a platform or exchange that facilitates the exchange of digital tokens;
- arranging the transmission of digital tokens between accounts;
- inducing or attempting to induce another person to buy or sell a digital token;
- providing custody of digital tokens where the provider controls them; and
- advising on digital tokens, which is notable because advice on payment tokens is not itself licensable under the Payment Services Act.
If you need the broader picture of how payment token services aimed at Singapore customers are regulated, our guide to digital payment tokens regulation in Singapore covers the domestic regime in more detail.
Requirements if a licence were granted
MAS's response paper explains what a licensee would face. It describes a minimum base capital or equivalent of S$250,000 and an annual licence fee of S$10,000, applying to companies, partnerships and individuals alike. Licensees would be subject to dedicated MAS notices on anti-money laundering and countering the financing of terrorism, technology risk management, cyber hygiene and regulatory returns, as well as MAS's guidelines on fit and proper criteria, outsourcing and business continuity.
MAS also expects an AML/CFT compliance officer at management level based in Singapore, prompt notification of major technology incidents and timely reporting of material suspicious activity. These are not light-touch requirements, and the economics only make sense for a business with a real, supervisable presence.
Are you caught? Testing the three elements
Whether a DTSP licence in Singapore is required turns on three elements, all of which must be present. Work through them in order and document the analysis, because MAS and counterparties will ask for it.
- Identify the person. Is the provider a company incorporated in Singapore, or an individual or partnership operating from a place of business in Singapore? A place of business is read broadly and can include any location used to carry on business. A foreign company is not caught merely because it has Singapore-resident employees, although the existing Acts may still bite on its Singapore activities.
- Classify the token. Is the asset a digital payment token or a token of a capital markets product? If it is only a utility or governance token, Part 9 does not apply, but check carefully: labels in a white paper do not decide the legal classification.
- Classify the activity. Does the business deal, operate an exchange, arrange transmission, induce trades, provide custody or advise? A purely technical service provider that never possesses money or tokens may fall outside, but the line can be fine.
- Locate the customers and front office. MAS looks at factors such as where front-office functions like sales and business development sit and where customers are. If any customers are in Singapore, the existing Acts, not Part 9, govern the activity.
- Check existing licences and exemptions. If the entity is already licensed or exempt under the Payment Services Act, the Securities and Futures Act or the Financial Advisers Act for that activity, it is generally outside the FSMA licensing requirement for the same activity.
- Decide and record the outcome. Record the conclusion in a board paper or legal memorandum, with the facts relied on. If the answer is that the business is caught, move straight to the options in the next section.
MAS assesses licence applications on whether the business model makes economic sense and whether there are legitimate reasons for not serving Singapore customers, among other factors. If the honest answer to "why Singapore?" is "tax, talent and reputation, but no supervision", an application is unlikely to succeed. Plan on the basis that a DTSP licence in Singapore will not be granted, and treat a successful application as the exception.
Your options if the business is caught
Businesses within scope have four realistic paths. None is free of cost or risk, and the right answer depends on the group's footprint, customer base and long-term plans.
| Option | What it involves | Main advantages | Main drawbacks |
|---|---|---|---|
| Apply for an FSMA licence | Formal application to MAS under Part 9, with capital, compliance and governance in Singapore | Allows overseas-only services to continue from Singapore if granted | MAS will generally not grant one; high cost and uncertain outcome |
| Obtain a licence under the existing Acts | Apply as a payment institution or capital markets services licensee and serve Singapore customers too | A recognised pathway with a full supervisory framework | Demanding application, ongoing obligations and Singapore-facing conduct rules |
| Restructure offshore | Move the token business, front office and decision-making to a licensed entity in another jurisdiction | Keeps the business running under a supervisor that will accept it | Real substance must move; residual Singapore activity may still be caught |
| Orderly wind-down | Cease the regulated services, return customer assets and close or repurpose the entity | Removes regulatory exposure | Loss of business; customer and creditor issues must be handled carefully |
The second option deserves careful thought. A business that genuinely wants to operate from Singapore can consider applying under the Payment Services Act 2019 or the Securities and Futures Act 2001 and serve Singapore customers as well. That changes the regulatory question entirely and brings a full set of conduct, consumer protection and AML obligations. Our team on payment services in Singapore and capital markets services licensing can help you test feasibility before committing to an application.
An illustrative scenario
The following example is illustrative only and does not describe any real client or matter.
A token trading business was incorporated in Singapore some years ago by two founders. It runs an over-the-counter desk and a small custody service for corporate customers in other parts of Asia and in the Middle East. It has never onboarded a Singapore customer. Its engineers are in Singapore; its sales team is split between Singapore and Dubai.
On analysis, every element of Part 9 is present: a Singapore company, payment tokens, dealing and custody services, and an overseas customer base. The founders' first instinct is to apply for a DTSP licence in Singapore. After a frank review of MAS's stance and their own business case, they choose instead to move the trading and custody business into a licensed entity in another jurisdiction, transfer client relationships with proper consent, and keep the Singapore company as a technology services provider that never holds client tokens or money.
Two issues need careful handling. First, the Singapore engineering company must not drift back into regulated activity, for example by approving trades or controlling wallets. Second, the founders, who remain resident in Singapore, need to confirm that their own roles in the offshore entity do not amount to carrying on a business from a place of business in Singapore.
Risks and common mistakes
Assuming offshore incorporation solves the problem
Part 9 reaches individuals and partnerships operating from a place of business in Singapore, not only Singapore companies. A founder who runs an offshore token business from a Singapore office or home may be personally exposed. The existing Acts can also apply extraterritorially to activity carried out partly in Singapore.
The fix is substance, not paperwork. Decision-making, client handling and control of assets must genuinely sit where the licensed entity is supervised.
Treating the token label as decisive
A token described as a utility or governance token may in substance be a payment token or a capital markets product. If it is, Part 9 or the existing Acts may apply. Classification should be done on the token's rights, functions and how it is marketed, and refreshed when the token or its ecosystem changes.
Where the analysis is finely balanced, record the reasoning and consider seeking MAS's view before launch rather than after.
Leaving residual regulated activity in Singapore
Groups that restructure often keep a Singapore entity for engineering, treasury or group services. That is lawful, but only if the Singapore entity does not deal, custody, arrange or advise in a way that amounts to digital token services. Shared wallets, shared signing keys and Singapore staff approving client transactions are typical warning signs.
Intra-group service agreements should define the Singapore entity's role tightly and be matched by real access controls.
Neglecting the wind-down obligations
Ceasing a business is itself a regulated process. Customer assets must be returned or transferred, client communications must be accurate, and AML records must be retained. MAS has said it contacted affected persons to discuss an orderly wind-down, which signals that it expects one.
A disorderly exit can create complaints, civil claims and questions from banks long after the regulated activity has stopped.
The cross-border angle
Most businesses caught by Part 9 are international by design, so the destination jurisdiction matters as much as Singapore. Licensing regimes for virtual asset service providers in the UAE, the UK, the European Union and elsewhere each have their own substance, capital and fit-and-proper tests, and none is a formality.
TRW & Co's offices in Dubai and London, and our network in Bangladesh, China and Europe, mean we can coordinate the Singapore analysis with the requirements of the receiving jurisdiction. For groups with founders or investors in South Asia, foreign exchange and outbound investment rules in the home country may also shape the structure. See our wider work on digital assets in Singapore and anti-money laundering compliance for the related compliance architecture.
Banks are a practical constraint too. Correspondent and operating banks increasingly ask token businesses to evidence their regulatory analysis. A clear written position on Part 9 can make account opening and ongoing reviews far smoother.
What to do next: a checklist
Whether you are an existing operator, a founder planning a launch or an investor doing diligence, the following checklist reflects how we approach the DTSP licence in Singapore question in practice.
- Map every group entity and individual with a Singapore connection, and what each actually does day to day.
- Classify each token handled, with reasons, and note where classification is uncertain.
- Identify the services provided and where customers and front-office staff are located.
- Confirm whether any existing licence or exemption already covers the activity.
- If caught, choose between a licence under the existing Acts, offshore restructuring or wind-down, rather than relying on a DTSP licence in Singapore being granted.
- Document intra-group arrangements and access controls so that the Singapore entity cannot drift back into regulated activity.
- Brief banks, auditors and investors with a concise written position.
- Diarise a review whenever the business model, token set or team location changes.
For a broader view of licensing choices, see our financial services regulation in Singapore page and our article on payments licensing strategy. If you would like us to review your structure, contact TRW & Co. Where Singapore court or tribunal representation is required, we work alongside Singapore-qualified counsel.
Frequently asked questions
01Does every crypto company in Singapore need a DTSP licence?
No. A DTSP licence in Singapore is only relevant to Singapore-incorporated companies, or individuals and partnerships with a place of business here, that provide digital token services solely to customers outside Singapore. Businesses serving Singapore customers are regulated under the Payment Services Act 2019 or the Securities and Futures Act 2001 instead, and if already licensed or exempt there they generally do not need an FSMA licence for the same activity. Providers dealing only in utility or governance tokens are outside the regime.
02Will MAS grant a DTSP licence?
MAS has said it has set the bar high and will generally not issue a licence, granting one only in extremely limited circumstances. It assesses factors such as whether the business model makes economic sense, whether there are valid reasons for not serving Singapore customers, whether the applicant is already supervised overseas to international standards and whether its structure is sound. Businesses should plan on the basis that a licence is unlikely and treat an application as an exception rather than the default route.
03Was there a transition period for existing businesses?
No. MAS confirmed in its response to consultation feedback that there would be no transitional arrangement. Providers caught by Part 9 had to suspend or cease their overseas digital token services when the provisions commenced on 30 June 2025, unless they held a licence. MAS said it had communicated its stance since 2022 and contacted affected persons to discuss an orderly wind-down of their activities.
04Am I caught if I work in Singapore for a foreign crypto exchange?
MAS has clarified that an individual employed by a foreign-incorporated company that provides digital token services outside Singapore does not, by reason of that employment alone, need a licence. However, the foreign company itself may need to consider the Payment Services Act, Securities and Futures Act or Financial Advisers Act if its activities are carried on partly in Singapore. Senior staff and founders who direct the business from Singapore should take advice on their specific roles.
05What happens if a business carries on without a licence?
Carrying on a business of providing digital token services without a licence where one is required is an offence under the Financial Services and Markets Act 2022, punishable by fines and imprisonment. The offence can apply to individuals as well as companies. Beyond criminal exposure, unlicensed activity can lead to bank account closures, investor concerns and difficulties obtaining licences elsewhere, because regulators routinely ask about past compliance.
06Can we keep a Singapore technology company after restructuring offshore?
Often yes, provided the Singapore entity does not itself provide digital token services. A technology or support company that never possesses customer money or tokens, does not control wallets and does not deal, arrange, induce or advise is generally on safer ground. The intra-group agreements, access controls and day-to-day practice must all match that limited role, because MAS will look at substance rather than labels.
Sources and official materials
- MAS clarifies regulatory regime for digital token service providers (6 June 2025) — MAS's licensing stance, scope and wind-down expectations
- MAS response to feedback on the DTSP consultation (30 May 2025) — Detailed scope, licensing criteria and licensee requirements
- Financial Services and Markets Act 2022 — Part 9 on digital token service providers
- Payment Services Act 2019 — Licensing of digital payment token services to Singapore customers
- Securities and Futures Act 2001 — Regulation of capital markets products, including tokenised forms
General information only, current as at 20 October 2026. It is not legal advice and does not create a lawyer–client relationship. Singapore law and regulatory practice change; check current official sources and take advice on the facts of your matter.
