Singapore’s Regulatory Pivot: From Sandbox to Strict Rules

Having analyzed blockchain markets through three boom-bust cycles, I’ve learned that regulators always overcorrect after disasters strike. Singapore’s Monetary Authority (MAS) is no exception. The DTSP framework effective June 2025 marks the end of an era where ‘regulatory tourism’ thrived under the Payment Services Act (PSA).

Why Now? Lessons from Terra and 3AC

The collapse of Terraform Labs and Three Arrows Capital exposed gaping holes in cross-border oversight. These firms exploited Singapore’s reputation while operating offshore—a shell game MAS can no longer tolerate. My forensic analysis of their balance sheets revealed how PSA’s loopholes enabled this: companies only needed licenses for local users, creating a regulatory blind spot FATF flagged as dangerous.

Key Changes Under DTSP:

• Global Reach: Licenses now required regardless of user location if operations touch Singapore soil
• Substance Over Form: No more ‘brass plate’ offices—MAS demands real AML/CFT infrastructure
• Broader Scope: Captures developers, marketers, and even individuals conducting crypto business

The Compliance Calculus

As someone who advises VASPs on jurisdiction selection, I see three paths for affected firms:

1. Invest in compliance teams (expect $500k+ annual overhead)
2. Pivot to pure DeFi models outside regulated activities
3. Relocate to emerging hubs like Abu Dhabi (though their standards are tightening too)

Conclusion: Quality Over Quantity

Singapore isn’t kicking out crypto—it’s filtering for survivors. While short-term pain is inevitable, this purge may ultimately strengthen its position as Asia’s most credible digital asset hub. As always in finance, the firms that adapt fastest will capture the institutional capital waiting on the sidelines.