Singapore Expands the Territorial Scope of Its Digital-Asset Regulation
Client Alert | June 23, 2025
This update provides an overview of the regulatory framework for digital token service providers and contains a Q&A on its key implications.
The Monetary Authority of Singapore (MAS) has announced that its long-awaited regulatory framework for digital token service providers (DTSPs) will take effect on 30 June 2025.[1] The DTSP framework incrementally expands the territorial scope of Singapore regulation of digital-asset activities.
1. OVERVIEW OF THE DTSP FRAMEWORK
Background
The new DTSP framework is set out in Part 9 of the Financial Services and Markets Act 2022 (FSMA) and takes effect on 30 June 2025. From that date, DTSPs will need to either be licensed or cease their regulated activities. However, the MAS has indicated that it will generally not issue licenses under the DTSP framework, as the operating models of DTSPs carry inherently higher money-laundering risk and cannot be adequately supervised by the MAS.[2] The DTSP framework therefore effectively prohibits these operating models.
DTSPs are defined as individuals, partnerships and Singapore corporations that are operating from a place of business in Singapore or are formed or incorporated in Singapore but which provide digital token (DT) services “outside Singapore”[3] The regulation of activities “outside Singapore” is the defining element of the DTSP framework.
As such, the DTSP framework introduces an incremental territorial expansion of Singapore’s existing regulation of digital-asset activities. Existing regulatory frameworks for digital-asset activities – primarily the Payment Services Act 2019 (PS Act), the Securities and Futures Act 2001 (SFA) and the Financial Advisers Act (FAA) – already apply to activities conducted “in Singapore” (and to certain activities that have other defined touchpoints with Singapore). These legacy frameworks are viewed by the MAS as not being sufficiently comprehensive in their territorial coverage, and the DTSP framework seeks to plug the gaps in that coverage.
The rationale behind the DTSP framework is that it will allow Singapore to be fully compliant with the anti-money laundering and countering-the-financing-of-terrorism (AML/CFT) requirements under the Financial Action Task Force (FATF) guidelines for Virtual Asset Service Providers (VASPs). Under the AML/CFT guidelines for VASPs, an FATF member is expected to regulate a VASP if it is established in the member’s jurisdiction, irrespective of the territorial ambit of the VASP’s activities. Achieving this regulatory outcome was the stated aim of the DTSP framework when the MAS first consulted on its introduction in 2020, and it continues to be the driving factor.[4]
Products and services covered
Under the new DTSP framework, DTs include “digital payment tokens”, which include the most liquid cryptocurrencies such as Bitcoin and Ether as well as stablecoins (whether centrally collateralised or algorithmic) and the majority of altcoins and other cryptocurrencies listed and/or traded in the crypto ecosystem.[5] Additionally, a DT includes any digital representation of a “capital markets product” and therefore captures e.g. tokenised securities (such as debentures and equities) as well as tokenised units in a collective investment scheme.[6]
Activities regulated as DT services include dealing (i.e. buying and selling), exchange operation, inducement, transfer, safeguarding and advisory services in relation to DTs.[7]
Territorial scope
In relation to the territorial scope of the DTSP framework, the following is key to note:
- In determining whether a DTSP is carrying on a business of providing DT services “outside Singapore”, factors such as whether the DTSP’s front-office functions (e.g. sales, business development) or customers are located outside Singapore are relevant.[8]
- The MAS attaches particular importance to the location of customers and has indicated that DTSPs (e.g. Singapore corporations) will fall within the scope of FSMA where they provide DT services solely to customers outside of Singapore.[9] However, as noted above, it appears that the location of customers is not the sole determinative factor.
- Where an individual is an employee of a foreign-incorporated company that provides DT services outside Singapore, work done by the individual as part of his or her employment with the foreign-incorporated company will not, in itself, attract a licensing requirement.
Interaction with legacy frameworks
A person’s activities will not qualify as a DT service that is subject to the DTSP framework where the person is licensed or exempt for those activities under the PS Act, SFA or FAA.[10]
When determining the position of a digital-asset business under Singapore law, the starting-point is therefore to determine whether the activities of that business fall under the PS Act, SFA or FAA. These legacy frameworks capture activities conducted “in Singapore” as well as certain other activities with Singapore touchpoints (e.g. the SFA regulates capital markets services which are provided partly in and partly outside Singapore or which are provided outside Singapore but which have a substantial and reasonably foreseeable effect in Singapore).[11]
If the activities fall under the PS Act, SFA or FAA, then a licence or exemption will be required under the relevant legacy framework and no additional licence will be required for those activities under the DTSP framework. If the activities fall outside all of these legacy frameworks but nonetheless have Singapore touchpoints (e.g. are routed through a Singapore corporation), the DTSP framework may apply.
2. Q&A – KEY IMPLICATIONS
The following Q&A is based on the most frequent questions we have received from clients in relation to the DTSP framework.
How significant is this development for the digital-assets industry in Singapore?
The DTSP framework only introduces a relatively small incremental change in the territorial scope of Singapore regulation, and as such, is not expected to affect many digital-asset businesses. Companies operating in Singapore today are typically operating within the territorial scope of legacy regulatory frameworks (i.e. the PS Act, SFA and FAA), and indeed many of them have become licensed under one or several of those frameworks or have determined that the substantive nature of their activities does not attract regulation (this may be the case for e.g. pure technology service providers). The DTSP framework is unlikely to affect the position of those companies.
This appears like a sudden regulatory announcement. Why did the MAS not give the industry more notice?
The MAS first consulted on the DTSP framework in 2020 and subsequently published a response to industry feedback in 2022, followed by another consultation paper in 2024 and response in 2025. The MAS had also previously indicated that it would give the industry at least 4 weeks’ notice of the effective date of the framework. As such, the introduction of the DTSP framework was neither sudden nor unexpected.
Does the DTSP framework bring new product or service types into the scope of regulation?
The DTSP framework mainly intends to expand the territorial ambit of existing Singapore regulation for digital-asset activities. In other words, it brings activities that have been subject to legacy frameworks (i.e. the PS Act, SFA and FAA) into the scope of regulation in a larger number of territorial scenarios, but does not introduce new types of regulated products or services. For example, activities relating to payment token derivatives or lending that have to date been unregulated in Singapore will not become regulated when the DTSP framework takes effect.
The only caveat is that DTSPs will be regulated for DT advisory services, which include advisory services relating to digital payment tokens such as Bitcoin and Ether. This type of advisory service has not, to date, been in scope of the legacy PS Act which regulates activities relating to digital payment tokens.
Does the DTSP framework open up a new licensing route for companies in Singapore?
No, the main objective of the framework is to prohibit DTSP operating models. The MAS may, in principle, grant a licence to a DTSP, but it will do so only in very exceptional circumstances.
Our company holds a licence in Singapore. Is the DTSP framework relevant to us?
A company in Singapore which conducts activities for which it holds a licence under the PS Act, SFA or FAA will not be subject to the DTSP framework for those same activities. Accordingly, the vast majority of licensees under the PS Act, SFA and FAA will remain unaffected by the DTSP framework.
However, it cannot be excluded that a company holding a licence under the PS Act, SFA or FAA conducts activities which do not fall under that licence but which are instead caught under the DTSP framework. This is fact-dependent and requires an assessment of the company’s specific operating model and territorial footprint. In the case of the vast majority of existing licensees however, the DTSP framework is unlikely to apply.
Is this mainly targeted at unlicensed crypto platforms that operate out of Singapore and do not serve Singapore customers?
The MAS Clarificatory Statement (published on 6 June 2025) does seem to suggest that a small number of platforms that operate out of Singapore and do not serve Singapore customers will be affected by the DTSP framework, and that the MAS has already been liaising with them on the winddown of their operations.
However, it is important to note that DTSPs are not confined to the aforementioned operating model. The statutory definition of a DTSP does not turn on the location of customers, and other statements issued by the MAS suggest that additional factors (e.g. location of the DTSP’s front-office functions, such as sales or business development) are also relevant in determining whether the DTSP provides DT services outside Singapore. For example, in our view, a Singapore corporation may be in scope of the DTSP framework where it is supported by a team based wholly outside Singapore and only serves customers outside Singapore.
What are the implications for companies in decentralised finance (DeFi)?
Singapore has a very large community of founders and developers in the DeFi space, many of them operating through Singapore developer companies and supporting the operations of protocols that use offshore legal wrappers (e.g. foundations). The activities of many of these teams are centered in Singapore and as such, the legacy frameworks which apply to regulated services conducted “in Singapore” (the PS Act, SFA and FAA) are most relevant to the assessment of these activities. In most cases, the new DTSP framework is unlikely to impact the team’s existing regulatory position.
In our experience, whether a DeFi project with operations in Singapore falls into the scope of regulation will depend mainly on the degree of control it can be seen to exercise over the protocol operations, and notably over user assets. This assessment will not change with, or be affected by, the introduction of the DTSP framework.
What are the implications for companies in the real-world assets (RWA) space?
The scope of the DTSP framework does cover RWA activities, as it captures services relating to (among others) digital representations of capital markets products such as securities and units in a collective investment scheme. However, RWA businesses which operate in Singapore will already have had to assess their position under the legacy regulatory frameworks. Most of those businesses with teams in Singapore will likely be operating “in Singapore” and will have had to determine whether they need to be licensed or exempt for their activities under the SFA and/or FAA. In most cases, the new DTSP framework is unlikely to impact the team’s existing regulatory position.
As the application of the DTSP framework and other Singapore regulatory frameworks is highly fact-dependent, we recommend that digital-asset businesses with Singapore touchpoints seek legal advice on their position. For guidance on this assessment, please feel free to reach out to any member of our global regulatory team below.
[1] MAS Response to Feedback Received on Proposed Regulatory Approach, Regulations and Notices for Digital Token Service Providers issued under the Financial Services and Markets Act 2022, 30 May 2025 (“May 2025 Consultation Response”) (link).
[2] MAS Clarifies Regulatory Regime for Digital Token Service Providers, 6 June 2025 (“MAS Clarificatory Statement”) (link).
[3] Section 137(1) and (3) FSMA.
[4] MAS Consultation Paper on the New Omnibus Act for the Financial Sector, 21 July 2020 (link), paragraph 3.5. Subsequent MAS publications on this topic included a response to industry feedback dated 14 February 2022 (link), a further consultation paper dated 4 October 2024 (link), and the May 2025 Consultation Response.
[5] Whether a token constitutes a “digital payment token” must be assessed on a case-by-case basis.
[6] Section 136(1) FSMA.
[7] Part I, First Schedule, FSMA.
[8] May 2025 Consultation Response, paragraph 3.10.
[9] MAS Clarificatory Statement.
[10] Section 137(5) FSMA.
[11] Section 339 SFA.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. If you wish to discuss any of the matters set out above, please contact any member of Gibson Dunn’s Financial Regulatory team, including the following:
Hagen H. Rooke – Singapore (+65 6507 3620, hhrooke@gibsondunn.com)
William R. Hallatt – Hong Kong (+852 2214 3836, whallatt@gibsondunn.com)
Jeffrey L. Steiner – Washington, D.C. (+1 202.887.3632, jsteiner@gibsondunn.com)
Michelle M. Kirschner – London (+44 20 7071 4212, mkirschner@gibsondunn.com)
Emily Rumble – Hong Kong (+852 2214 3839, erumble@gibsondunn.com)
Becky Chung – Hong Kong (+852 2214 3837, bchung@gibsondunn.com)
Jun Qi Chin – Singapore (+65 6507 3622, jqchin@gibsondunn.com)
QX Toh – Singapore (+65 6507 3610, qtoh@gibsondunn.com)
Nicholas Tok – Singapore (+65 6507 3621, ntok@gibsondunn.com)
Arnold Pun – Hong Kong (+852 2214 3838, apun@gibsondunn.com)
Jane Lu – Hong Kong (+852 2214 3735, jlu@gibsondunn.com)
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.
Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.