The Singapore FSMA is about to take effect, and the digital asset industry is facing new challenges.

As June 30, 2025 approaches, Singapore's financial regulatory landscape is set to undergo significant changes. The formal implementation of the Financial Services and Markets Act (FSMA) will establish strict standards for the digital asset industry, aimed at preserving Singapore's reputation as a global financial hub.

The FSMA primarily targets Digital Token Service Providers (DTSP), covering various aspects such as the trading, transfer, custody, and consulting of digital tokens. The regulatory focus is on individuals or companies that have offices or registered companies in Singapore but primarily provide services overseas. Although these cross-border operations have limited local ties to Singapore, the potential risks could harm Singapore's reputation. Therefore, the regulatory authorities have decided to implement strict controls, requiring DTSPs to obtain licenses and meet high compliance standards.

In light of the upcoming regulatory changes, industry insiders have raised numerous questions. The Monetary Authority of Singapore (MAS) provided detailed responses to these issues on June 6th. Below is a summary of the main questions:

1. License application scope: Even if the company is registered in Singapore solely for tax purposes or only establishes executives, a license must still be applied for as long as it actually provides overseas digital asset services.

2. Definition of business premises: MAS has not explicitly defined whether working from home constitutes a business premises, but emphasizes that judgment will be based on the substance of the business. If substantial business activities are conducted at home, it may be determined that a license is required.

3. License application threshold: MAS states that licenses will only be issued in very limited circumstances. Applicants must have a reasonable business model, comply with international regulatory standards, and have a compliant company structure. It is worth noting that there will be no transition period after the implementation of FSMA, and unlicensed DTSPs must immediately cease overseas services.

4. Fees and Capital Requirements: The license application fee and annual fee are both SGD 10,000, and a minimum capital of SGD 250,000 must be prepared. Although some small businesses report significant pressure, the MAS insists on this standard to ensure that applicants have sufficient strength.

5. Customer Due Diligence: After obtaining the license, the DTSP must conduct a re-assessment of existing customers, including identity verification and source of funds review. The specific completion time will be determined by MAS based on the level of risk associated with the customers.

6. Technical Risks and Cybersecurity: DTSP must ensure the stability of IT systems and the security of customer data, and report to MAS within 1 hour after a major incident occurs. In addition, various cybersecurity measures, including multi-factor authentication, must be implemented.

7. Behavior and Disclosure Requirements: DTSP must record transactions, disclose rates, establish fixed business hours, and issue risk warnings to clients.

8. Compliance Guidelines: MAS will provide general guidance but emphasizes that DTSP must develop specific implementation plans based on its own circumstances.

In addition, the FSMA has imposed higher compliance requirements on licensed or exempt institutions, including stricter technical risk management, the submission of regular audit reports, and enhanced anti-money laundering measures.

In the face of these upcoming changes, industry companies should promptly conduct self-assessments of their business status and seek legal advice if necessary; at the same time, actively invest resources to upgrade systems and train employees to meet the new compliance standards; proactively communicate with MAS to clarify timelines and specific requirements; and closely monitor the guidelines and frequently asked questions released by MAS.

Different scales and types of enterprises may need to adopt different response strategies, such as applying for a DTSP license, adjusting business models, seeking exemptions, or exploring alternative technologies. Regardless of the chosen solution, enhancing compliance capabilities and risk management levels will be key to the future development of the digital asset industry in Singapore.