Offshore cryptocurrency customers facing stricter regulations: Unlicensed Singaporean companies dealing with such clients urged to withdrawn operations
The Monetary Authority of Singapore (MAS) has announced new regulations aimed at crypto and stablecoin firms that are incorporated in Singapore but operate offshore. These firms have until the end of June 2025 to either cease operations, obtain a license, or face potential fines and imprisonment.
The new regulations are designed to encourage offshore firms to bring their operations onshore, obtain a license, or leave Singapore altogether. The MAS is concerned about the potential for money laundering and the challenge of supervision due to offshore operations.
All digital token service providers (DTSPs) offering cross-border crypto services must obtain a license under the Financial Services and Markets Act 2022 (FSMA) by June 30, 2025. Failure to comply can lead to fines up to SGD 250,000 and imprisonment up to three years.
Issuers of Singapore or G10 currency-pegged stablecoins with over SGD 5 million in circulation must be licensed as Major Payment Institutions for both Digital Payment Token (DPT) services and Stablecoin Issuance Services. Those with less than SGD 5 million circulating need a DPT license and may opt for stablecoin issuance licensing.
Only stablecoins issued exclusively in Singapore by licensed entities (banks or non-banks) are classified as “MAS-regulated stablecoins.” This entails strict requirements on solvency, consumer protection, and operational standards.
The new regulations also include stricter marketing and promotional rules, enhanced consumer protection measures, and restrictions on lending and staking services for retail customers to reduce risk exposure. Firms must implement enhanced safeguards for customer assets, disclose risks adequately, and handle conflicts of interest under MAS’s updated regulatory framework effective from June 2025.
The legislation splits the licensing of 'digital token service providers' into those operating in Singapore and those targeting offshore clients. Offshore-focused firms fall under the Financial Services and Markets Act.
The distinction between being 'in Singapore' and 'outside Singapore' is not solely based on servicing Singapore customers, but also on having operations within Singapore. This clarification by lawyers from Gibson Dunn reinforces MAS's position on the supervision requirements for firms operating in Singapore.
Several high-profile firms, including Circle and Paxos, have licenses as Major Payment Institutions and operate in Singapore, making them exempt from the new regulations. However, other offshore firms operating in Singapore will need to comply with the new regulations by the deadline.
MAS has implemented two sets of regulations: payment services licenses for digital tokens in Singapore and regulations for offshore firms, which were not implemented until now. The MAS warned during its October consultation that there would not be a lengthy transition period for offshore firms.
The announcement comes after the MAS conducted a consultation affecting Singapore crypto and stablecoin firms that operate offshore. The new regulations are part of the MAS's efforts to ensure a safe and secure digital payment landscape in Singapore.
- The MAS regulations require offshore crypto and stablecoin firms operating in Singapore to either obtain a license, cease operations, or face potential fines and imprisonment by the end of June 2025, as part of their efforts to maintain a safe and secure digital payment landscape.
- New regulations by the Monetary Authority of Singapore (MAS) aim to encourage offshore firms to bring their operations onshore, obtain a license, or leave Singapore altogether, due to concerns about money laundering and the challenge of supervision due to offshore operations.
