The Singapore Financial Service and Markets Act is about to take effect, and the digital asset industry is facing strict regulation.

On June 30, 2025, Singapore's Financial Services and Markets Act (FSMA) will come into effect, establishing strict regulatory rules for the digital asset industry. The Monetary Authority of Singapore (MAS) aims to uphold Singapore's reputation as a global financial center while mitigating the risks of money laundering and terrorist financing.

The FSMA focuses on regulating Digital Token Service Providers (DTSPs), including individuals or businesses that have offices or registered companies in Singapore but primarily provide digital token services overseas. Although these services are less related to Singapore locally, they may pose reputational risks to Singapore. Therefore, the MAS has decided to implement strict regulations, requiring DTSPs to obtain a license and comply with high standards of compliance.

Recently, MAS responded in detail to industry feedback and answered many key questions:

1. License application standards: MAS indicates that DTSP licenses will only be issued in very rare cases. Applicants need to have a reasonable business model, comply with international regulatory standards, and have no issues with their company structure. It is worth noting that there is no transition period; from June 30, 2025, unlicensed DTSPs must cease overseas services.

2. License fees and capital requirements: The application fee and annual fee for the license are both 10,000 Singapore dollars, fixed and unchanged. In addition, applicants must prepare 250,000 Singapore dollars in capital to demonstrate their capability to conduct business in Singapore. Although some companies report that these requirements put pressure on small businesses, MAS stated that it will not make adjustments.

3. Customer Due Diligence (CDD): After obtaining the license, DTSPs need to re-conduct CDD on existing customers, including identity verification and source of funds verification. The completion time will be determined based on the customer risk assessment.

4. Technical Risks and Cybersecurity: DTSPs must ensure the stability of IT systems, the security of customer data, and report to MAS within 1 hour after a significant event occurs. Cybersecurity requirements include account protection, system patch updates, installation of firewalls, and antivirus software.

5. Behavioral and disclosure requirements: DTSPs are required to record transactions, issue receipts, publicly disclose exchange rates and fees, and set fixed business hours. Additionally, they must publish risk warnings to remind customers of potential loss risks.

6. Compliance Guidelines: MAS will provide general financial guidelines and consider publishing a dedicated FAQ for DTSP.

For institutions that already hold licenses under the Payment Services Act (PSA), the Securities and Futures Act (SFA), or the Financial Advisers Act (FAA), or have obtained relevant exemptions, there is no need to apply for the DTSP license under the FSMA additionally. However, the FSMA imposes higher compliance requirements for all DTSP-related businesses, including stricter technical risk management, submission of annual audit reports, and higher anti-money laundering and counter-terrorism financing requirements.

In light of the upcoming regulatory changes, industry insiders suggest that businesses should immediately conduct self-assessments to determine whether they need to apply for licenses, invest resources to enhance compliance levels, proactively communicate with MAS to clarify requirements, and closely monitor subsequent guidelines. In the future, the digital asset industry in Singapore will face a stricter regulatory environment, and businesses need to weigh compliance costs against business development to make strategic choices that suit their needs.