Singapore, known as 'Asia's Delaware', attracts Web3 companies with its regulatory flexibility, but recent changes in rules are imposing new requirements.
Changes in Singapore's Regulatory Environment
Singapore has attracted international companies for years due to its clear regulations, low taxes, and fast incorporation processes. These factors have made the country appealing for the Web3 industry. However, recently, there has been a shift in the regulatory approach. Regulators that once adopted flexible measures are now introducing stricter standards and requiring greater accountability from companies.
New DTSP Regulations: Reasons and Implications
Starting June 30, 2025, the new Digital Token Service Provider (DTSP) regime will come into effect, mandating all companies operating in Singapore to obtain licenses. This new regulation aims to address issues associated with ‘shell’ companies, which register in Singapore but conduct their business overseas. This could lead to significant market changes in Web3, as companies that do not comply with the new requirements may be forced to cease operations.
Transitioning to New DTSP Regulatory Standards
The new regulations require operators in Singapore to meet stricter compliance measures, including Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT). This also means that companies must clearly understand their obligations to regulators. Depending on their ability to meet the new standards, businesses may need to make radical changes to their operations or consider relocating to other jurisdictions.
Singapore's new regulations highlight a shift in the approach toward the Web3 industry. While there may be short-term challenges, this could lead to a more stable and transparent business environment in the future.
