Singapore's tightening of Web3 regulations prompts industry reflection

Recently, the Monetary Authority of Singapore (MAS) released a response document regarding new regulations for digital token service providers (DTSP), sparking widespread discussion in the Web3 industry. This document, which will take effect on June 30, 2025, is viewed by many industry insiders as a "cliff-like tightening" of the Web3 sector.

Singapore has long been regarded as a global paradise for Web3, attracting numerous entrepreneurs and project teams. Its zero capital gains tax policy, well-established regulatory sandbox, high-quality talent pool, and the blending of Eastern and Western cultures are all important factors contributing to its status as a hotbed for Web3. However, with the rampant growth of the industry, some negative events such as money laundering and project collapses have begun to impact Singapore's international image, putting pressure on regulatory authorities.

The core of the new MAS regulations is that individuals, partnerships, or companies registered or primarily operating in Singapore that provide digital token services to overseas clients must obtain a license. The regulatory scope covers various aspects including virtual asset and fiat currency exchange, transfer, payment, custody, agency issuance, sales, intermediary services, and investment advice. It is worth noting that this regulation does not apply to service providers that only target the local Singapore market, and that there are already licensing requirements for those providers or for non-digital token services.

Regarding the highly concerned issue of remote work, MAS's response indicates that overseas company employees working from home in Singapore, only serving overseas clients and whose work is part of the employment contract, do not need to apply for a license. However, if communication with overseas clients occurs in non-home settings ( such as offices ), it may fall under regulatory oversight. This ambiguous definition has raised concerns within the industry.

The motives behind the recent tightening of regulations by the Singaporean government mainly include: standardizing the market, attracting compliant funds, ensuring tax revenue and sustainable development; addressing the impacts of negative events and maintaining the international image; eliminating gray and black industries as well as weaker teams by raising the threshold, encouraging the retention of compliant large institutions, and promoting the long-term healthy development of the industry.

Regulatory attitudes towards Web3 are constantly changing in various regions around the world. The U.S. has introduced the "Genius Act", and Hong Kong has released a stablecoin draft, both indicating a trend towards stricter regulation. Against this backdrop, industry insiders believe that places like Hong Kong, the U.S., and the UAE may become new Web3-friendly regions. For smaller projects, Europe (, such as Poland ), Canada, Australia, and other Southeast Asian countries ( like Malaysia and Thailand ) may also become new options.

Web3 practitioners exhibit strong characteristics of digital nomadism, with significant cross-border attributes. In the face of the constantly changing regulatory environment in various regions, flexibly choosing compliant areas will become the new norm for the industry. Although the tightening of regulations in Singapore has raised some concerns, it may also be seen as a signal of the industry's maturation, helping to promote Web3's development towards a more regulated and healthier direction.