Licensing Regime for Digital Token Service Providers

On 30 May 2025, the Monetary Authority of Singapore (“MAS”) announced and clarified the implementation of the licensing requirement for digital token service providers (“DTSPs”) under the Financial Services and Markets Act 2022. In its Response to Feedback Received Consultation Paper on Proposed Regulatory Approach, Regulations, Notices and Guidelines for Digital Token Service Providers issued under the Financial Services and Markets Act 2022 (the “Response”), it confirmed that DTSPs require a licence starting 1 July 2025, with no transitional arrangements, and elaborated further on some of the licensing requirements. Having attracted criticism for its cautious approach, the MAS followed up with a media release, “MAS Clarifies Regulatory Regime for Digital Token Service Providers”, on 6 June 2025 (the “Clarification”). 

Requirement for Licensing 

Under the Financial Services and Markets 2022 (“FSM”), a person in Singapore, including a company incorporated in Singapore, requires a licence to carry on a business of providing the following services outside of Singapore, unless an exemption applies: 

1. any service of dealing in digital tokens; 

2. any service of facilitating the exchange of digital tokens; 

3. any service of accepting (whether as principal or agent) digital tokens from one digital token account, for the purposes of transmitting, or arranging for the transmission of, the digital tokens to another digital token account; 

4. any service of arranging (whether as principal or agent) for the transmission of digital tokens from one digital token account to another digital token account; 

5. any service of inducing or attempting to induce any person to enter into or to offer to enter into any agreement for or with a view to buying or selling any digital tokens in exchange for any money or any other digital tokens (whether of the same or a different type); 

6. any service of safeguarding a digital token, where the service provider has control over the digital token; 

7. any service of carrying out for a customer an instruction relating to a digital token, where the service provider has control over the digital token; 

8. any service of safeguarding a digital token instrument, where the service provider has control over one or more digital tokens associated with the digital token instrument; 

9. any service of carrying out for a customer an instruction relating to one or more digital tokens associated with a digital token instrument, where the service provider has control over the digital token instrument; 

10. any service relating to the sale or offer for sale of digital tokens which involves – 

1. 1. 1. providing advice, either directly or through publications or writings, and whether in electronic, print or other form, relating to any digital tokens; or 

2. providing advice by issuing or promulgating research analyses or research reports, whether in electronic, print or other form, relating to any digital tokens. 

The MAS clarified that an individual requires a digital token (“DT”) services licence if he/she carries out the regulated activity by himself/herself. In contrast, he/she does not require a licence if he/she carries out the work as part of his/her employment with a foreign-incorporated company. 

In its Response, the MAS announced that DTSPs which are subject to licensing under the FSA must suspend or cease carrying on a business of providing DT services outside Singapore by 30 June 2025. No transitional arrangements will be provided. 

Conversely, the MAS reiterated in its Clarification that providers of services for digital payment tokens or tokens of capital market products that serve customers in Singapore are already subject to regulation and licensing under the Payment Services Act 2019 and the Securities and Futures Act 2001. There is no change to what these licensed providers can do. These providers, which serve customers in Singapore, may also provide services to customers outside of Singapore. 

Notable Exemptions from the Requirement for Licensing 

First of all, we would like to highlight that the FSM subjects services regarding digital tokens to licensing (sec. 137 FSM and Part 1 of the First Schedule to the FSM). It is our view that only activities for the benefit of third parties can be regarded as services. Therefore, activities carried out for the person’s own benefit, e.g. proprietary trading, do not qualify as a DT service. 

Moreover, only persons who carry on a business of providing any type of DT service require a licence (sec. 137 FSM). Therefore, a person generally does not require a DTSP licence if they occasionally carry out a regulated activity without system. 

Finally, the following types of financial institutions are exempt from the requirement to hold a DTSP licence to the extent that the DT service activity is incidental to the activity for which they hold a licence (or are exempt from holding a licence): 

1. financial institutions that are required to be licensed, approved or recognised under the Securities and Futures Act 2001, or exempt thereof, such as  

1. 1. 1. holders of a capital markets services (“CMS”) licence for fund management, dealing in capital markets products, providing custodial services, or advising on corporate finance, and 

2. recognised market operators; 

2. licensed and exempt financial advisers; 

3. major and standard payment institutions holding a licence under the Payment Services Act 2019, namely for digital payment token service. 

Thus, financial institutions that are not required to obtain or hold a DTSP licence include 

1. fund management companies that manage a collective investment scheme that invests in digital tokens; 

2. brokers (holding a CMS licence for dealing in capital markets products) that offer tokenised securities; 

3. corporate finance advisers (holding a CMS licence for advising on corporate finance) that assist companies in raising capital through tokenised securities; 

4. payment institutions (holding a licence for digital payment token services) when arranging an over-the-counter (“OTC”) transfer of digital tokens between two parties outside of Singapore. 

Requirements to Obtain a Licence 

In its Response and Clarification, the MAS highlighted that it will only grant a DT services licence under extremely limited circumstances due to its concerns about their higher risk of money laundering (“ML”) and terrorism financing (“TF”). 

Nonetheless, the MAS has provided additional clarification regarding the requirements under the Financial Services and Markets Act 2022 for a DTSP to obtain and maintain a licence. 

• The DTSP must have a permanent place of business in Singapore where at least one person is present during specified business hours. 

• The DPTSP must have a minimum of SGD 250,000 in base capital, total capital contribution or cash deposit in the case of a company, partnership or limited liability partnership and individual respectively. 

• The DTSP must have a business model that makes economic sense and must be able to demonstrate to the MAS’ satisfaction that it has valid reasons as to why it does not intend to carry on a business of providing DT services in Singapore despite operating in or being formed or incorporated in Singapore. 

• The DTSP must not operate in a manner that is of concern to the MAS. Hereby, the MAS may take into account if the DTSP is already regulated and supervised for its compliance with relevant internationally agreed standards, such as standards established by the Financial Stability Board, the International Organisation of Securities Commissions, and the Financial Action Task Force (“FATF”) by all the relevant supervisors in the jurisdictions that it provides DT services outside of Singapore.  

• The directors and the CEO of a DPTSP must be fit and proper and have sufficient experience in operating a DTSP business as well as a sufficient understanding of the regulatory framework for DTSPs in Singapore. 

• An executive director, or a similar person in the case of other entities, must be resident in Singapore. 

• The DTSP must put in place an adequate business structure that does not give rise to any concerns by the MAS, e.g., regarding its capacity to adequately manage key risks associated with its business activities and its ability to comply with regulatory obligations. 

• The DTSP must have compliance arrangements that are commensurate with the scale, nature, and complexity of its operations. These may take the form of an independent compliance function in Singapore, or compliance support from its holding company or overseas related entity. In any case, a DTSP is required to appoint a suitably qualified compliance officer at the management level who is based in Singapore. 

• The DTSP is required to appoint an auditor to conduct an audit of the transactions in relation to the DT services and submit the audit report to the MAS annually. 

• The DTSP must put in place a technology risk management framework and controls adequate for its activities that depend on the underlying distributed ledger technology and interaction with service providers in the network. 

• An annual licence fee of SGD 10,000 will apply. 

How We Can Help 

Ingenia Consultants Pte. Ltd. provides regulatory support services for financial institutions, including licensing, compliance and internal audit. We support companies in their applications with the Monetary Authority of Singapore (“MAS”) across different sectors, such as capital markets, financial advice and payment services, including digital payment token services. We assist licensed financial institutions in compliance, from outsourced compliance services to advice and regulatory projects, and provide their senior management with assurance through internal audits. 

For more information on our compliance and internal audit services and capabilities, please contact: 

Rolf Haudenschild 

Co-founder 

Ingenia Consultants Pte. Ltd. 

rolf.haudenschild@ingenia-consultants.com