Singapore's Web3 Regulations Tighten: The Real Situation and Future Choices for Practitioners

June 30, 2025, will become an important watershed for Singapore's Web3 industry. Starting from this date, according to the new Financial Services and Markets Act (FSMA), all individuals or companies providing digital token-related services in Singapore, regardless of the source of clients, must obtain a Digital Token Service Provider (DTSP) license, or they will face legal sanctions.

The Monetary Authority of Singapore (MAS) has clearly stated in its latest regulatory document that unlicensed entities must immediately cease relevant operations, and applications in progress will not be considered a legal basis. This move is seen by industry insiders as "the strictest cryptocurrency regulation to date."

To gain a deeper understanding of the overlooked key points in the FSMA document, we consulted the opinions of professional lawyers. At the same time, we interviewed five Web3 practitioners working in Singapore to understand their views on the current situation and coping strategies.

1. Analysis of Key Points of the Bill

After in-depth discussions with experts in digital economy law, we discovered the following key points of interest in the legislation:

1. The FSMA is not just a supplementary regulation for overseas business, but a comprehensive upgraded regulatory framework that covers all domestic and foreign operations. As long as a company has a place of business or is registered in Singapore, it must comply with FSMA regulations regardless of where the business is directed.

2. The regulatory focus has shifted from an institutional level to an individual level. The FSMA grants MAS the power to directly supervise high-risk individuals, which means that even non-management staff, freelancers, or remote workers engaging in relevant services in Singapore may become subjects of regulation.

3. The FSMA has significantly raised the compliance threshold. Even companies that have obtained a PSA license need to resubmit materials to meet FSMA requirements. Applying for a DTSP license not only requires an initial capital of 250,000 SGD but also necessitates having a resident compliance officer and establishing an independent audit mechanism, among other things.

2. The Real Voices of Web3 Practitioners

In the face of an increasingly stringent regulatory environment, different types of Web3 practitioners have varying responses and strategies:

1. Founders of startup projects believe that Singapore may no longer be suitable for early-stage entrepreneurship, but small businesses always have a way to survive. They do not rule out the possibility of moving away from Singapore in the future.

2. OTC traders believe that Singapore's regulatory attitude is pragmatic, leaving only those enterprises that can bring substantial value. He observed that some KOLs and exchange practitioners have chosen to suspend operations or remain on the sidelines.

3. Senior practitioners in the Web3 AI field point out that Singapore's regulatory measures aim to address existing issues in the industry and ensure the healthy development of the ecosystem. He noted that many freelancers are beginning to discuss Web3 topics more cautiously.

4. An entrepreneur who has lived in Singapore for nearly 20 years believes that Singapore's Web3 policy has not seen a dramatic shift and remains one of the most inclusive and trustworthy places to start a business. He emphasized that Web3 is still an important component of Singapore's national strategy.

5. Founders of AI startups have stated that the current regulatory changes mainly affect companies with strong financial attributes, having limited impact on small tech teams. They believe that Singapore remains a fair, open, and rational place to view innovation.

Conclusion

Singapore's tightening of regulations can be seen as a self-adjustment of the international financial center, rather than a complete rejection of the Web3 industry. Web3 practitioners are weighing whether to accept stricter regulations in exchange for long-term policy stability, or to turn to other seemingly more friendly markets that may carry more uncertainties. This regulatory change will undoubtedly reshape Singapore's Web3 ecosystem, but its status as a major global fintech center remains solid.