Known as a bustling frontier for crypto enterprises, Singapore currently presents a landscape reshaped by decisive regulatory action. What was once a loosely regulated market has evolved into a mature, structured and more stringent environment following the full implementation of recent comprehensive legislation.
Regulatory Tightening with the Financial Services and Markets Act
The most significant legal development shaping Singapore’s 2025 crypto market is the full enforcement of the Financial Services and Markets Act (FSMA). As of 30 June 2025, a critical regulatory loophole many crypto firms had utilised was decisively closed.
Crypto Market Pre-FSMA
Digital Token Service Providers (DTSPs) could operate from Singapore while exclusively serving overseas markets, thereby sidestepping the stringent licensing requirements of the Payment Services Act (PSA) that applied to firms serving local customers.
Closing a Loophole
The FSMA now requires any DTSP incorporated or operating substantively from Singapore to obtain a license, regardless of whether they serve local or overseas customers.
MAS’s Firm Stance
The Monetary Authority of Singapore (MAS) has stated that it is unlikely to approve applications from firms wishing to provide services only to overseas persons.
Rationale
This policy seeks to address the high inherent risks of money laundering and terrorist financing (ML/TF) and the MAS’s limited supervisory oversight over cross-border operations, while mitigating regulatory arbitrage where firms exploit Singapore’s reputation while avoiding robust oversight.
Singapore’s Crypto Market’s Status Quo
The direct consequence of this regulatory tightening is the significant market exodus and consolidation, with a trend of unlicensed exchanges leaving Singapore.
Case Study of Tokenize Xchange
After failing to secure a Major Payment Institution license from MAS, Tokenize announced on 20 July 2025 it would cease its Singapore operations by 30 September 2025. Customers are now required to withdraw their assets, including Bitcoin (BTC) and Ethereum (ETH). This resulted in the layoff of its local employees and a pivot to other jurisdictions like Labuan and Abu Dhabi.
A Broader Trend
The new rules have triggered a shakeout of unlicensed firms. It is anticipated that over 500 staff in the fintech ecosystem will relocate to the UAE or Hong Kong, where regulators are thought to take a softer stance. Major exchanges like Bybit and Bitget, which lack a Singapore license, have been impacted by the high compliance bar.
The departures send a clear signal to the market that compliance with MAS regulations is non-negotiable to operate in Singapore.
Shift in Investor Sentiment
The regulatory upheaval has coincided with a noticeable shift in investor behaviour. A February 2025 poll revealed a sharp decrease in Singapore crypto ownership, attributed to:
Profit-Taking
Many investors sold their holding to realise profits during record-high prices in late 2024 and early 2025.
Flight to Safety
Amidst macroeconomic uncertainty, there has been a broader shift to safer assets, with 49% of respondents now keeping cash in savings or fixed deposits, up from 42% in 2024.
Despite the drop, a core of dedicated investors remain.
BTC and ETH
BTC and ETH are still the most popular assets, held by 68% and 48% of crypto investors, respectively.
Marketing maturing
This suggests the market is maturing from widespread speculation towards more focused, long-term investment strategies.
Singapore’s Long-Term Vision
Despite the exit of some firms, the prevailing view is that Singapore is not closing its doors on crypto but is raising the bar to foster a high-quality ecosystem.
Path for Compliant Firms
The MAS continues to issue licenses to firms meeting its stringent criteria. As of 19 June 2025, 33 institutions including Coinbase and OKX have been granted digital payment token licenses under the PSA.
Focus on Stability
Spurred by global events like the 2022 FTX collapse, MAS aims increase consumer protection and financial stability.
Continued Market Potential
The market remains significant, with projections estimating (a) revenue to reach US$392.3 million in 2025 and (b) the number of users to grow to 4.19 million by 2026.
Conclusion
Singapore’s crypto transformation reflects a clear strategic choice: prioritising regulatory rigor over market size. While the FSMA has caused short-term market consolidation and may reduce market share temporarily, it strengthens Singapore’s credibility and long-term competitiveness as a trusted global leader in the crypto economy.
In this time of regulatory clarity, proactive legal strategy is essential for any business operating in or from Singapore. At Advomi, our services include:
Regulatory Licensing
Assisting end-to-end with licensing applications under the current FSMA and PSA, and helping you build and maintain robust compliance frameworks to meet MAS requirements.
Strategic Advisory & Legal Opinions
Offering detailed legal opinions on your proposed business model by assessing its viability under the current regulatory regime and advising on necessary adjustments to align with Singapore’s legal framework.
Operational & Corporate Restructuring
Providing strategic guidance on restructuring your operations to ensure full compliance, especially for firms impacted by the changes in legislation.
Ongoing Compliance Support
Acting as your long-term partner by providing continuous support to help you stay ahead of regulatory changes, manage ongoing reporting obligations, and maintain best practices.
Regardless, our legal team, strengthened by our partnership with InterAsia Law Alliance is here to support you at every stage.
References:
Coin World. (2025). Tokenize Xchange exits Singapore, Shifts focus to international markets. Ainvest. https://www.ainvest.com/news/tokenize-xchange-exits-singapore-shifts-focus-international-markets-2507/
Erin Liam. (2025). CNA explains: Singapore’s tightened crypto licensing rules – “closing the door” or “raising the bar”? CNA. https://www.channelnewsasia.com/singapore/crypto-licensing-mas-cna-explains-5186446
Shikhar Gupta. (2025). As binance stays and tokenize leaves, Singapore’s crypto sector is seeing change. The Business Times. https://www.businesstimes.com.sg/companies-markets/binance-stays-and-tokenize-leaves-singapores-crypto-sector-seeing-change
Statista. (n.d.). Cryptocurrencies – Singapore: Statista market forecast. https://www.statista.com/outlook/fmo/digital-assets/cryptocurrencies/singapore
Straits Times, Sharp drop in crypto ownership in Singapore in 2025 as investors sell off: Poll. The Straits Times. (2025, May 21). https://www.straitstimes.com/business/crypto-ownership-in-singapore-fell-in-2025-as-investors-sell-off-poll?ref=more-on-this-topic
Timothy Goh. (2025). Crypto Exchange Tokenize to shut down Singapore operations. The Straits Times. https://www.straitstimes.com/business/companies-markets/crypto-exchange-tokenize-xchange-to-shut-down-singapore-operations
TRM. (2025). Unpacking Singapore’s Financial Services and Markets Act: What crypto firms need to know: TRM blog. https://www.trmlabs.com/resources/blog/unpacking-singapores-financial-services-and-markets-act-what-crypto-firms-need-to-know
