DTSP Licensing in Singapore: MAS Requirements Under the Financial Services and Markets Act 2022

Since 30 June 2025, a Singapore incorporated company, or an individual or partnership operating from a Singapore address, that provides certain digital token services exclusively to customers outside Singapore can no longer sit outside the Monetary Authority of Singapore’s licensing net simply because it has no local customers. Part 9 of the Financial Services and Markets Act 2022 (FSMA) introduced a new licence, the Digital Token Service Provider (DTSP) licence, and MAS has said plainly that it expects to grant very few of them.

For years, a gap existed in Singapore’s digital asset regulation. The Payment Services Act 2019 and the Securities and Futures Act 2001 generally catch digital token activity that is directed at, or carried on in relation to, persons in Singapore. A Singapore registered company, or a person working out of a Singapore office, that dealt exclusively with an overseas clientele in digital payment tokens or tokenised capital markets products could therefore be Singapore based in every practical sense, with staff, a bank account and management here, while falling outside both regimes. MAS regarded this as a money laundering and terrorism financing risk it could not adequately supervise, and closed the gap through Part 9 of the FSMA.

For company secretaries, directors and founders in the fintech and digital asset space, this is not a routine compliance filing. It is a threshold question: does the business, as structured, fall within Part 9 at all, and if it does, is a licence realistically obtainable. This article sets out who is caught, what a digital token service covers, how MAS is applying the licensing standard, and what it means in practice for incorporation and registered office decisions.

What Triggered the DTSP Licensing Regime

MAS first flagged this regulatory gap in its consultation on the FSMA back in February 2022, and returned to it in subsequent consultations on 4 October 2024 and 30 May 2025. On 6 June 2025, shortly after Part 9 commenced, MAS issued a media release clarifying the scope of the new regime. It confirmed that from 30 June 2025, digital token service providers serving customers solely outside Singapore, in relation to digital payment tokens or tokens representing capital markets products, would need to be licensed, and that MAS had set the bar high for licensing and would generally not issue a licence. Providers already serving Singapore customers under the Payment Services Act or the Securities and Futures Act were unaffected, as were providers dealing only in utility or governance tokens, which fall outside the new regime.

Who Needs a DTSP Licence

Section 137 of the FSMA sets out the licensing requirement in two parallel limbs. Under section 137(1), an individual or a partnership must not, from a place of business in Singapore, carry on a business of providing any type of digital token service outside Singapore unless it holds a licence. Under section 137(3), a Singapore corporation, which for this purpose includes a limited liability partnership, must not carry on such a business, whether from Singapore or elsewhere, unless it holds a licence. The second limb is deliberately broad: it catches a Singapore incorporated company even if it operates entirely from an overseas office, so relocating staff outside Singapore does not, on its own, take a Singapore company out of scope.

Sections 137(2) and (4) add a presumption that is easy to overlook. If a person provides a digital token service alongside some other primary business from a Singapore place of business, that person is presumed to be carrying on a secondary business of providing the digital token service, and this presumption is not rebutted merely by showing that the token service was related or incidental to the main business.

Certain persons are excluded under section 137(5), broadly because they are already regulated elsewhere: those licensed, approved, recognised or exempted under the Securities and Futures Act 2001 in respect of capital markets product activities, those licensed or exempted under the Financial Advisers Act 2001, those licensed or exempted under the Payment Services Act 2019 for digital payment token services, persons listed in the Second Schedule to the FSMA, and any class of persons MAS prescribes.

Quick Reference: In Scope or Not

What a Digital Token Service Covers

Section 136 of the FSMA defines a digital token as either a digital payment token within the meaning of the Payment Services Act 2019, or a digital representation of a capital markets product that can be transferred, stored or traded electronically and meets any further characteristics MAS prescribes, excluding tokens MAS specifically excludes. Digital token service then takes its meaning from Part 1 of the First Schedule to the FSMA, subject to exclusions in Part 2 of that Schedule. Read together with MAS’s June 2025 clarification, the practical effect is that dealing in, or facilitating the transmission or safekeeping of, digital payment tokens or tokenised capital markets products can fall within the regime, while services relating to purely utility or governance tokens, which do not function as payment instruments or represent capital markets products, do not.

Businesses should not assume a token sits outside scope simply because it is marketed as a utility token; MAS looks at substance, and a token that in practice functions as a means of payment or a store of value is more likely to be treated as a digital payment token regardless of its label.

The Licensing Standard: A Deliberately High Bar

Section 138 sets out the conditions MAS must be satisfied of before it will grant a licence, including that the applicant has a permanent place of business in Singapore, that an executive director, for a corporation, or resident partner, for a partnership, is Singapore resident, that the applicant meets prescribed financial requirements, that MAS is satisfied the applicant is fit and proper, and, critically, that MAS is satisfied the public interest will be served by granting the licence.

MAS has made clear this last condition will rarely be met for DTSPs serving only an overseas customer base. Its media release stated that money laundering risks are higher in such business models, and that where the substantive regulated activity takes place outside Singapore, MAS is not in a position to supervise it effectively. There was no grace period built into the regime for existing operators: providers caught by section 137 were required to cease the affected activity once Part 9 took effect on 30 June 2025, a position MAS says it had communicated consistently since its first FSMA consultation in 2022. Full eligibility criteria are set out in MAS’s Guidelines on Licensing for Digital Token Service Providers, which took effect on the same date.

Penalties for Operating Without a Licence

Section 137(6) sets out the penalties for contravening the licensing requirement. An individual convicted of an offence faces a fine of up to $125,000, imprisonment of up to three years, or both, with a further fine of up to $12,500 for each day the offence continues after conviction. Any other person, including a company, faces a fine of up to $250,000, with a further fine of up to $25,000 for each day the offence continues after conviction. Section 139 separately makes it an offence to hold oneself out as a licensee, or to hold out as carrying on a digital token service business from Singapore to overseas customers, without in fact being licensed or exempt, and carries the same penalty structure.

Practical Implications for Company Secretaries and Directors

Assessing Whether the Business Needs a Licence

The starting point is an honest look at the customer base and the token type. If a Singapore incorporated company, or a Singapore based founder, deals in digital payment tokens or tokenised capital markets products and every customer is located outside Singapore, Part 9 is very likely engaged, and the realistic outcome is that the activity cannot continue in its current form rather than that a licence will be granted. If the business already holds, or would in any event need, a licence under the Payment Services Act or Securities and Futures Act because it also serves Singapore customers, the DTSP regime should not add a second layer for the same activity. Directors of fintech and digital asset businesses should also revisit MAS’s broader compliance expectations for regulated entities, covered in our guide to the FSTI 4.0 fintech grant governance and compliance framework, and the documentation typically required in a fintech sector compliance review.

Consequences of Operating Unlicensed After the Transition

Because there was no transition period once Part 9 commenced, any Singapore incorporated company or Singapore based individual or partnership that continues to provide an in scope digital token service to overseas customers without a licence, or without falling within an exemption, is exposed to the criminal penalties under section 137(6) from 30 June 2025 onward, including the daily continuing fines for as long as the activity continues. This is a materially different risk profile from most Singapore corporate compliance issues, which are typically administrative rather than criminal.

Incorporation and Registered Office Considerations

Because section 137(3) reaches a Singapore corporation regardless of where it actually operates from, incorporating in Singapore is not, by itself, either the problem or the solution. What matters is the activity and the customer base. Company secretaries onboarding a digital asset business should ask early whether the proposed activities and business activity codes describe dealing in, or facilitating, digital payment tokens or tokenised capital markets products, a classification question our guide to the 2025 SSIC code migration covers in more detail, and whether all, or only some, of the intended customers will be outside Singapore. The same questions apply to a foreign company considering redomiciling to Singapore. It is also worth distinguishing this regime clearly from MAS’s separate stablecoin regulatory framework under the Payment Services Act, since the two are easily confused but rest on different statutory bases and serve different policy purposes. Where the position is genuinely uncertain, particularly for structures set up before June 2025 that have not been reassessed, it is worth getting legal advice on this before the business model is finalised or the company is incorporated.

Conclusion

The DTSP regime under Part 9 of the FSMA closes a gap that Singapore incorporated and Singapore based digital asset businesses could previously rely on, and MAS has been unusually direct in saying that it expects to grant very few licences under it. For directors and company secretaries, the practical task is not filling in a licence application. It is working out, early and honestly, whether a business falls within section 137 at all, and if it does, planning around the reality that continuing to serve an overseas only customer base from Singapore is unlikely to remain viable. Getting this assessment right at incorporation, or when a company’s activities change, is far cheaper than untangling it after the fact, and it sits alongside the same discipline that founders should bring to sound financial management more generally.

To speak with the team at Raffles Corporate Services, you can email [email protected] or call, SMS, or WhatsApp +65 8501 7133. We are happy to assist with any queries.

The Editorial Team, Raffles Corporate Services