Trading platforms, crypto VCs, and market makers: Who exactly is affected by Singapore's DTSP Act?

On May 30th, the Monetary Authority of Singapore (MAS) officially released its final response document on the licensing regime for Digital Token Service Providers (DTSP). Initially, the policy did not garner widespread attention. However, only a few days later, a particular article on a public account went viral, prompting the entire industry to realize its far-reaching implications. The document explicitly mandates that all projects operating in Singapore without a valid license must cease operations by June 30th. This has caused anxiety among many crypto professionals based in Singapore.

What impact will this new regulation have on the crypto industry? Are we about to witness another "Wandering Earth"-style migration wave? On the evening of June 12th, BlockBeats specially invited Christopher Liu, Chief Compliance Officer at Matrixport, Chen Wu, CEO of EX.IO, Ye Su, Founding Partner of ArkStream Capital, and Valentina, BD Director at Herring Global, to discuss the topic "End of the Web3 Haven? What Impact Will the Singapore DTSP Regulation Have?". Together, they analyzed the regulatory logic behind the act and its profound implications for the industry's development.

BlockBeats: Tonight, we’ve invited several seasoned guests from the frontlines of regulatory VCs, exchanges, and other esteemed institutions to discuss the intentions behind Singapore's regulatory policy, as well as its short- and long-term implications for the Web3 sector in Singapore. Let’s start with a brief introduction from each of our speakers.

Ye Su: Thank you for having me. I’m Ye Su, Partner at ArkStream Capital. Established in 2020, we are a crypto-focused fund specializing in early-stage investments and liquidity strategies. Over the past five years, we’ve invested in over 100 projects, including recently launched ones such as Space and Time, Kernel, and Particle Network. We also maintain close collaborations with institutions represented by the speakers here today.

While I’m not currently based in Singapore, half of our LPs are from Singapore, many of whom are licensed institutions. In our sixth fund, approximately 20% is allocated to Singapore. I personally lived in Singapore for over a year in 2022, but decided not to stay permanently due to the regulatory environment and overall lifestyle. I’m glad to be here today to engage in this enriching discussion with everyone. Thank you.

Chen Wu: Hello everyone, I’m Chen Wu, Founder and CEO of EX.IO, a compliant exchange based in Hong Kong. We are currently one of the licensed exchanges in Hong Kong and the only one to be recognized as a key enterprise introduced by the Hong Kong government. With our background in traditional finance, we are dedicated to compliant development.

Although we currently do not have an official business presence in Singapore, before deciding to apply for a Hong Kong license, we conducted research on compliance pathways in multiple regions across the globe, with Singapore naturally being one of the key focuses. Our ultimate choice of Hong Kong was based on an overall judgment of its history, economy, and policy environment. I will share more about our decision-making process in the future.

On this occasion, I’d also like to introduce an initiative we are launching: a four-city roadshow in Mainland China, in collaboration with multiple organizations including CTO Lab (City University of Hong Kong) and BlockBeats, the co-organizer of today’s event. The tour will focus on talent cultivation, project incubation, and ecosystem development. This is part of our commitment to corporate social responsibility, and we hope to encourage more universities and young people to engage in the Web3 industry. Thank you all.

Christopher Liu: Hello everyone, I’m Chris, the Chief Compliance Officer of Matrixport Group. Matrixport is a crypto asset platform with business lines spanning OTC, custody, and more, which many of you might already be familiar with. I’m currently based in Singapore, having previously worked in banking, payments, and regulatory bodies, and I’ve been in the crypto industry for three and a half years now. My remarks today reflect my personal views and not the stance of the company. Thank you for the invitation, and I look forward to engaging with all of you.

Valentina: Hi everyone, I’m Valentina from Herring Global. Our entire team originated in Singapore, including our traders and founders, and we’ve taken a compliance-first approach since the beginning. After the DTSP regulations were introduced, our organization was actually included on the official “license exemption list.” As a liquidity provider, our services span both centralized and decentralized scenarios, offering liquidity solutions to project teams and VCs. We also work with the institution where Mr. Ye Su is based. Personally, I’ve previously worked on DeFi projects and am now with Herring Global. I’m delighted to explore with all of you the latest developments in Singapore’s compliance landscape today.

BlockBeats: Regarding Singapore’s new DTSP regulations, public reactions seem very intense. What are your own or your peers’ perceptions about this? Is it really that serious?

Christopher Liu: Sure. Actually, the Financial Services and Markets Act (FSA) is not entirely new—it was initially formulated back in 2020. Although the effective date has only just been clarified, the industry in Singapore has long been aware of this regulatory framework’s imminent implementation. The core backdrop to this is the 2019 requirement from the Financial Action Task Force (FATF), which explicitly called for member countries to establish a regulatory mechanism covering locally licensed institutions and businesses conducting cross-border activities from within their jurisdictions. As a result, Singapore issued a consultation paper in 2020, originally referred to as the Omnibus Act, which later evolved into the Financial Services and Markets Act (FSA) in 2022.

So, this time the policy implementation was not a surprise attack, nor was it unexpected within the industry. The MAS (Monetary Authority of Singapore) engaged in communication and consultations with industry organizations both before and after the policy release. Regarding the question of whether it's "really that serious," if you only follow the Chinese-speaking community or certain media reports, it might indeed seem alarmist, as if Singapore intends to completely sever external business ties. However, after releasing the document on May 30, MAS promptly clarified: licensed entities can still conduct overseas business and recruit users.

The entities truly affected are those without licenses but are conducting international business. MAS also mentioned that they have identified some affected platforms and are assisting them in transitioning, such as applying for licenses. Overall, MAS has not shown a "one-size-fits-all" approach.

Valentina: Currently, our institution operates under a "license exemption" status. From the very beginning, we made it clear that we were pursuing a compliance-first path and have maintained ongoing communication with the regulators. The current status is this: during the evaluation process, MAS granted us exemption, but this doesn't mean we can operate without a license indefinitely. There are three potential outcomes for our exemption status:

1. Securing a formal license, which may not necessarily be a DTSP but could be another type of license

2. Deciding as a business to exit this sector and not apply for a license

3. MAS identifying issues during its annual review and requiring us to cease operations

In the initial stage of this new policy release, the industry indeed experienced some degree of panic, particularly for exchanges and custody service providers. However, for entities that are already on the compliance track and have consistent communication with MAS, the actual impact is minimal. Singapore's core regulatory stance is not about stifling innovation but rather enabling technological exploration within a compliance framework. MAS continues to support the development of emerging technologies like DeFi, stablecoins, and AI, provided that mechanisms for anti-money laundering (AML) and KYC/KYB are in place. So, the "severity" of the policy really depends on whether an enterprise truly integrates compliance into its growth strategy.

Chen Wu: To clarify, we are a Hong Kong-licensed exchange, not a Singapore-based virtual asset trading platform. To be honest, when we saw the Chinese-speaking community panic about Singapore's policy changes, there was indeed some "secret relief" on our side. At the time, we also noticed some KOLs suggesting that Singapore might no longer be an ideal destination for Web3 startups, and some even started discussing a return to Hong Kong, Dubai, or other regions.

There were also many comparisons between Hong Kong’s VATP (Virtual Asset Trading Platform) license and Singapore’s DTSP framework. Some argue that the VATP is more lenient and retail investor-friendly. However, after engaging offline with many project teams deeply rooted in Singapore, we found that there are actually not that many entities "preparing to leave." Most still prefer to develop locally. At the end of the day, it's because, while the DTSP framework has been introduced, its regulatory details, thresholds, and scope of application remain unclear. Key questions like who’s eligible to apply, who qualifies for exemptions, and which activities are restricted still lack definitive answers.

We’ve seen discussions within the community, such as whether DeFi projects face restrictions, whether they can continue operating in Singapore, or whether they can circumvent regulations—interpretations vary widely. This solidifies my belief that choosing Hong Kong was the right decision. While Hong Kong’s compliance pathway is strict, at least its policies are clear and thresholds are well-defined. The VATP license guidelines we applied for are nearly 300 pages long, with detailed specifications and strong operability. This highlights a noticeable difference: for instance, Dubai’s regulatory framework is constantly evolving. Although its documentation is relatively concise, it iteratively improves in terms of clarity and transparency every year.

In contrast, while Singapore provided a three-year policy preview, it only released detailed guidelines a month before the final deadline, leaving significant uncertainty. This ambiguity not only affects whether existing projects stay but also whether new ones dare to enter and whether capital is willing to commit. Therefore, I believe the real impact of the DTSP might not be about "who gets driven away," but rather "who can still be attracted." However, this issue currently lacks sufficient discussion among the community. Later, I’m eager to hear Mr. Su Ye’s perspective on this from a VC angle.

Christopher Liu: I’d like to add a point. Right now, many people—especially some online KOLs—immediately assume that the release of the DTSP framework reflects Singapore’s overarching regulatory logic for the entire crypto industry, but that’s not actually the case.

Currently, the primary regulation applicable to the cryptocurrency industry in Singapore is the Payment Services Act (PSA). Over the past two years in our communications with MAS (Monetary Authority of Singapore), regulators have repeatedly emphasized that if you intend to provide services like exchanges, custody, or OTC trading in Singapore, you should apply for a PSA license, specifically under the Major Payment Institution (MPI) category. The introduction of the DTSP is meant to address gaps that the PSA doesn’t cover, such as companies registered in Singapore but primarily serving overseas users without holding a PSA license.

The overarching reason behind the introduction of the DTSP still stems from FATF (Financial Action Task Force) requirements for anti-money laundering (AML) regulations. The expansion of the regulatory framework aims to include entities previously outside PSA’s scope but operating overseas businesses. If you are genuinely a Web3 practitioner planning to operate in Singapore long term—such as OTC, custody, or trading platforms—what you should apply for is still the PSA's MPI license, not the DTSP.

MAS also clarified when releasing the DTSP documentation that they will not engage in "dual licensing." They won’t require an institution to apply for multiple licenses simultaneously. If you already hold a PSA license or are in the process of applying for one, the DTSP will have minimal impact on you.

BlockBeats: Ye Su, you previously referred to this policy as a “regulatory performance measure” on Twitter. Could you elaborate on your viewpoint?

Ye Su: When I made that tweet, I noticed that some people were reacting very strongly to this policy, using terms like “massive purge.” At the time, I introduced the concept of "regulatory performance studies" not as a criticism, but rather to encourage everyone to adopt a different perspective: this is a strategic rhythm on the government’s part.

Let me use an analogy: it's like a project launching a “milking event,” which also follows a roadmap. In the first phase, it widely attracts user participation; in the second phase, it requires participants to complete KYC (Know Your Customer) and AML (Anti-Money Laundering) processes; in the third phase, it retains high-quality users to drive the growth of the project’s ecosystem. I believe Singapore’s regulatory evolution for Web3 is quite similar.

Starting in 2017, Singapore openly encouraged all Web3 businesses to set up operations—that was the "open phase." By 2021, it transitioned into the "filtering phase," emphasizing compliance. Now, with the formal implementation of DTSP, it has entered the "consolidation phase," meaning it’s only welcoming truly compliant and well-resourced firms for long-term development.

Looking at the scope of the new legislation, it’s incredibly broad, covering activities such as token issuance, custody, trading, payments, matchmaking, staking, and even home-office operations. The only exceptions are pure technical consultancy or non-trading-related advertising and promotion. I've also compared this to two similar policy evolution paths that Singapore has undertaken in the past: First, the 2019 reform of the payments industry, where the government announced plans to clear out 90% of payment institutions but provided a three-year transition period, with around 40% ultimately securing approval. Second, the 2023 adjustment of family office tax exemptions, where the exemption threshold jumped from SGD 5 million to SGD 20 million. Even in that case, it was not a sudden change but involved a transitional period.

Essentially, these policies have a consistent objective: retaining compliance-driven, legitimate businesses while weeding out those exploiting grey areas for arbitrage. It appears to be "strict regulation" on the surface, but in reality, it’s about "selective welcoming." That’s why I described this as a kind of "regulatory performance"—a proactive signal from Singapore within the global compliance narrative. From this perspective, it’s a strategic statement representing their ambition to position themselves as a "global compliance innovation hub."

Ye Su’s Tweet

BlockBeats: Why has Singapore issued this guideline? What would be your thoughts on its medium- and long-term impact on the Web3 sector in Singapore?

Christopher Liu: In terms of regulatory clarity, Singapore is actually one of the earliest countries in the Asia-Pacific region to establish a licensing framework for the crypto industry. Since the introduction of PSA licenses in 2020, a fairly mature regulatory logic has been formed.

The introduction of the DTSP framework extends the existing system, making the entire structure more complete. MAS has also explicitly stated that institutions already holding PSA licenses or on a compliance pathway can continue to provide services to both local and overseas customers. For institutions that have already built compliance frameworks, this is a further "confirmation."

Moreover, MAS has expanded the regulatory definition of "digital currencies" in recent years and allowed the submission of formal applications for custody service licenses starting last year. These details illustrate that MAS is not cracking down on the industry but is instead gradually refining regulatory boundaries while balancing "preventing retail speculative trading" and "supporting industry development." From a medium- to long-term perspective, Singapore will continue to serve as a compliance hub for Web3, with the goal of encouraging compliant platforms to use Singapore as a base to extend their reach across the Asia-Pacific region.

Valentina: Overall, Singapore has always aimed to find a balance between "encouraging innovation" and "ensuring financial stability." The emergence of the DTSP regulation fills some gaps that the original PSA could not cover, especially after a series of high-profile industry collapses revealed regulatory blind spots.

From a medium- to long-term perspective, this policy could have several major impacts: First, it raises the barriers to entry for the industry. For early-stage projects or those with limited resources, the cost of compliance could become a significant entry barrier. Singapore, in the future, will be more suitable for teams that are committed to compliance and have long-term plans. Second, it accelerates the clearing out of weaker players in the industry. Teams unwilling or unable to follow a compliance pathway will be forced out, which will lead to Singapore's digital asset ecosystem evolving toward being "high-quality, transparent, and regulated." Third, it makes it easier to attract traditional financial capital. For large institutions, regulatory clarity is crucial. The introduction of the DTSP essentially opens the door for these players. For example, family offices, bank-backed trading institutions, and other traditional financial players with stringent compliance requirements may now formally participate in the Web3 ecosystem under Singapore’s clear policy framework.

In summary, I believe the implementation of DTSP is not about "cracking down" but rather "restructuring." It will help Singapore build a long-term ecosystem that integrates traditional finance with crypto innovation.

Chen Wu: I strongly agree with the points made by both of you. Ultimately, the government's purpose in introducing this policy is to optimize and enhance the nation's overall economic structure. At its core, the DTSP regulation addresses the issue of Anti-Money Laundering (AML). The essence of all compliance regulations boils down to two key points: first, AML; and second, investor protection.

Currently, the first step in most global compliance frameworks starts with AML. Why? Because this represents the fundamental baseline of the international financial system. From this perspective, to understand why Singapore made this decision, we must consider it from the strategic level of national policy.

Many people refer to Singapore as one of Asia’s financial hubs, alongside Hong Kong. However, if you look at the data, Singapore is actually not as "financially dependent" as one might imagine. The financial sector accounts for about 13% of its GDP, whereas Hong Kong peaked at around 23-24%. As a sovereign nation, Singapore's foundation lies in its irreplaceable geographical position—a crucial trade hub connecting the East and the West.

Its economic development started with re-export trade, progressively moving into high-value-added manufacturing and supply chain services, complemented by elite governance, education, technology, and real estate policies. This has built a robust national ecosystem. From a macro perspective, Singapore doesn’t heavily rely on inflows of "easy money"; instead, it prioritizes stable, high-quality, and controllable capital flows.

When we turn to the financial sector itself, Singapore boasts significant advantages in banking: metrics like total assets, profitability, non-performing loan ratios, and payment clearing capabilities all outperform Hong Kong. However, its weakness lies in its capital markets, where IPO activity is sluggish and daily trading volumes hover around $8-10 billion—a far cry from Hong Kong. In contrast, Singapore is a leader in wealth management across Asia.

The rise of its wealth management industry is closely tied to an influx of high-net-worth individuals and family offices. They value Singapore for its wealth security and risk-hedging benefits. However, this "money flows in, but projects don't land" scenario brings its own set of challenges—such as untaxed capital, rising real estate prices, and increasing social costs. Specifically, after the "Fujian Gang Money Laundering Case" in 2023, the external perception of the crypto industry faced some skepticism.

Thus, this regulatory upgrade is not merely a response to international pressure; it is also a systematic national policy action aimed at "cracking down on financial gray areas and improving the quality of capital."

Ye Su: Our fund isn’t registered in Singapore, but because the majority of LPs in Asia are concentrated there, many of our LPs come from licensed institutions or large corporations. Broadly speaking, Singapore’s policy logic can be summed up in two key points: AML and investor protection.

From a micro perspective, we’re also seeing some very real societal issues: crypto companies renting luxury offices, not paying local taxes, driving up local housing prices and certificate of entitlement (COE) costs, while local residents feel left out and unable to enjoy the benefits of the industry. This phenomenon of "resource crowding out" has, in fact, pushed the government to regulate in response to public opinion. Coupled with the 2023 money laundering case, the entire regulatory framework is now entering a "refined governance phase." This isn’t simply about tightening regulations, but about the government adjusting the structure of inbound capital and reinforcing social trust.

Additionally, from the perspective of institutional distribution, the recent licensed and exempt lists released by MAS include major platforms such as Circle, Coinbase, and HashKey, as well as some platforms specializing in OTC, custody, or derivatives. The real impacted parties, however, are more likely to be project teams and startups. This is because Singapore’s startup ecosystem is not as vibrant as Hong Kong’s, and such projects are the group most affected by the adjustment in policies.

BlockBeats: What are the thresholds and points of attention for relevant parties currently applying for a DTSP license?

Valentina: There's actually a very critical point in MAS’s media release on June 6: they stated that they would set a high bar for licensing and that licenses would not be granted lightly. The message is very clear: applying for a DTSP license is extremely challenging.

So my suggestion is to start by understanding the foundation of two primary licenses: one is PSA (Payment Services Act), and the other is CMS (Capital Markets Services). These two licenses currently form the most basic regulatory framework recognized by MAS. If you plan to apply for a license, the first thing is to ensure that your organization has robust KYC/AML policies and a fund segregation mechanism in place. This is not just about having processes on paper; it needs to be integrated into daily operations, technical systems, and data management. Singapore emphasizes compliance with technology and operational transparency to a very high degree. Without a long-term systematic plan, it’s hard to successfully navigate the application process. Therefore, I strongly suggest that project teams thoroughly research the applicable ranges and compliance pathways of PSA and CMS before considering a DTSP license.

Christopher Liu: Let me add a bit more. First, let’s clarify: we at Matrixport are one of the 33 licensed entities in Singapore, and we are also applying for another type of license, so we have firsthand experience in this field. I completely agree with Tina’s points. Singapore’s regulatory logic is very clear: the DTSP framework is designed to fill in areas not covered by the PSA. However, the main regulatory backbone remains PSA. MAS has also made it clear that they do not engage in redundant regulation—there’s no need for multiple applications for the same type of business activities.

Based on my past experiences with license applications across various regions, one key advantage in Singapore is the centralized regulatory structure: OTC, custody, stablecoins, exchanges—all fall under the unified management of MAS. This makes communication highly efficient and ensures consistent processes. That said, regulatory requirements are continuously evolving. In the earlier phases, the focus might have been on AML and Technology Risk Management (TRM), but now it also includes user protection, handling conflicts of interest, and more. Especially in the aftermath of multiple major industry collapses in 2022, regulators have broadened their focus significantly.

Overall, Singapore remains a very rational regulatory environment. Although sometimes the media portrays it in an overly dramatic way, DTSP is not a "ban," but rather a "completion." Currently, nearly all regions worldwide are strengthening their licensing mechanisms, and this will become an irreversible long-term trend.

BlockBeats: Thank you very much, Mr. Liu, for your insights. One last question: Will DTSP affect this year's TOKEN2049 event?

Christopher Liu: I don't think so. TOKEN2049 is a commercial event and does not fall under license regulation. Even during the period when F1 banned advertisements, various promotions were still allowed within the TOKEN2049 venue. This shows that Singapore still welcomes industry exchanges and technology showcases; it just has stricter requirements for fundraising and business activities. So, everyone can feel confident about participating.

BlockBeats: Great, and thanks again to all the speakers for their brilliant contributions. From today's discussion, it is clear that the regulatory boundaries are becoming increasingly defined. Compliance is no longer an "option" but rather a "passport" to enter the market. The future of Web3 will no longer stand in opposition to regulations but will work together with policies to build a new order.

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