The Monetary Authority of Singapore’s new crypto rules aim to civilise “wild west” crypto markets.
Last month, Singapore’s central bank, the Monetary Authority of Singapore’s (MAS) had ordered all locally based crypto service providers to cease offering digital token services to overseas markets.
It’s part of a steady regulatory tightening primarily due to persistent concerns over Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) within the crypto sector.
Among other rules, the central bank has announced that non-compliance could lead to fines of up to SGD250,000 and jail terms of up to three years.
High-profile scandals have also played a pivotal role in boosting the authority’s concerns. On the dramatic collapses of cryptocurrency hedge fund Three Arrows Capital and Terraform Labs (TFL) in 2022, the U.S. SEC had highlighted sanctity of consumer trust. It had sued TFL for allegedly defrauding crypto investors, leading to a $40 billion loss in the 2022.
The arrest of Three Arrows Capital’s co-founder, Su Zhu in Singapore also led to the fears of illicit activities within the sector.
In April 2022, Singapore passed the Financial Services and Markets Act (FSM Act) to close regulatory gaps and expand MAS’s oversight of crypto firms abroad, building on earlier laws like the Payment Services Act that align with global Financial Action Task Force (FATF)standards against money laundering and terrorism financing.
MAS has adopted further safeguards when it comes to licensing. From June 30, 2025, Singapore-incorporated DTSPs that exclusively serve overseas markets are mandated to obtain a specific license under the FSM Act.
MAS also has made it clear that it will “generally not issue a licence” for such operations, citing higher money laundering risks and the inherent difficulty in effectively supervising entities whose substantive regulated activities are conducted outside Singapore.
This stance has led to over 100 companies being rejected or forced to withdraw their license applications, with only a handful of entities like DBS Vickers Securities, Independent Reserve, and FOMO Pay currently licensed.
The regulator also rejected requests for a grace period, emphasizing the high risk of abuse.
This new regulatory posture has directly triggered a “crypto exodus,” with major exchanges such as Bitget and Bybit reportedly planning to relocate to Dubai and Hong Kong.
As Singapore tightens its regulatory perimeter, Dubai and Hong Kong are actively positioning themselves as attractive alternative destinations for crypto exchanges, each offering distinct advantages.
Dubai has become a global crypto hub thanks to its zero tax on crypto gains, clear regulations, and business-friendly free zones, where companies can avoid the 9% corporate tax if income is earned abroad.
In the last three years, reports claim that Dubai has built a strong crypto regulatory system. Launched in 2022, VARA is the world’s first dedicated crypto regulator, focusing on clear rules, strict marketing standards, and influencer disclosures. Abu Dhabi’s ADGM also offers a solid framework for digital assets, supporting innovation while managing risks. With allegedly more relaxed policies, regulatory sandboxes, and over $30 billion in crypto investment in 2024, Dubai has attracted major players like Binance, Crypto.com, and OKX—cementing its place as a leading crypto hub.
Hong Kong’s Securities and Futures Commission (SFC) has been systematically developing its regulatory framework since 2019, with the Virtual Asset Service Provider (VASP) licensing framework becoming effective on March 1, 2023.
This framework mandates that any entity operating a virtual asset exchange or offering VA-related services to the Hong Kong public must be licensed.
Hong Kong’s VASP regime sets a high bar, requiring firms to be legally incorporated, financially stable with at least 12 months’ expenses covered, and have strong risk, AML, and cybersecurity systems in place, plus insurance for client assets.
Licensed firms must also undergo regular audits. While services were initially limited to professional investors, new proposals aim to open up virtual asset trading to retail users and include OTC dealers and custodians. One big change would let licensed dealers trade on overseas platforms, as long as investor protections are in place, making Hong Kong potentially appealing to crypto firms.
The relocation of crypto exchanges and the evolving regulatory environments in various jurisdictions present both potential benefits and risks for consumers. For example it has cut remittance costs and helped people in inflation-hit countries like Venezuela protect their money.
They’re also transforming retail with faster payments and digital rewards. But risks remain high. Scams, fraud, and collapses like FTX expose users, especially those with low financial literacy, who often wrongly assume their funds are protected by regulators.
Authorities like the UK’s FCA label crypto as high-risk and have restricted retail access to risky products like lending and borrowing. Regulations vary by country, creating uneven consumer protections worldwide.
CEXs simplify crypto for beginners but sacrifice user control, drawing scrutiny. New rules like Singapore’s FSM Act push CEXs toward safer practices, such as separate client wallets. MAS’s strict regulations, though causing some firms to leave, aim to create a safer environment for consumers.
MAS’s regulations, particularly under the Financial Services and Markets Act 2022 (FSM Act), aim to safeguard customer assets and mitigate risks associated with digital payment token (DPT) service providers. The shift from a “Wild West” to integration with traditional financial systems demands higher standards of compliance, transparency, and consumer protection.
