Industry Restructuring and New Opportunities After Tightening Web3 Regulations in Singapore

The recent statement issued by the Monetary Authority of Singapore ( MAS ) has caused a stir in the Asian Web3 community. The statement requires all unlicensed digital token service providers ( DTSPs ) to cease all operations by June 30, or face criminal penalties. This marks a significant shift in Singapore's regulatory stance towards the Web3 industry.

The core of this regulatory tightening is the Financial Services and Markets Act passed in 2022, particularly Article 137 therein. This provision requires all individuals or institutions that have a place of business in Singapore and provide digital token services to overseas users to obtain a DTSP license. This "penetrative regulation" logic aims to comprehensively cover both domestic and overseas operations in Singapore, closing off regulatory arbitrage opportunities.

The MAS's definition of "digital token services" encompasses almost all aspects of digital asset business, from token issuance, custody, trading to payments. Companies without a license will be required to immediately cease related activities. The fundamental reason for this strict regulation is Singapore's extreme emphasis on the national financial reputation and concerns about the risks of money laundering and terrorist financing that the cross-border anonymity of digital token services may pose.

After the new regulations were introduced, Web3 practitioners in Singapore quickly became polarized. Some small project teams and individual practitioners are facing immense pressure, and the possibility of relocating from Singapore cannot be ruled out. The high threshold for applying for the DTSP license has also deterred many startups. However, some local industry insiders believe that this is more about clarifying and refining the existing regulatory framework rather than a complete shift.

At the same time, Hong Kong and Dubai are actively attracting global crypto talent. Hong Kong has launched the world's first comprehensive regulatory framework for fiat-backed stablecoins, while Dubai offers an attractive tax environment and an independent digital asset regulatory authority. However, it is worth noting that the trend of globalization in regulation is becoming increasingly evident, and it is impossible to have a "utopia" that is completely independent of global rules.

In this regulatory transformation, stablecoins and the tokenization of real-world assets ( RWA ) are becoming the most promising areas of development. The stablecoin market has experienced explosive growth, with increasing activity in cross-border payment settlements. At the same time, RWA is viewed as the next trillion-dollar market. Globally, countries are fiercely competing for dominance in the "minting" of digital currencies.

For institutions that have successfully obtained licenses, a new regulatory environment is creating clear competitive barriers. Currently, only 33 companies have obtained the digital payment token (DPT) license, including well-known institutions such as Coinbase and Circle. Some local institutions in Singapore, such as MetaComp, have established a complete compliance licensing system and are building the next generation of financial infrastructure through blockchain.

MetaComp, as a major payment institution authorized by MAS, not only holds licenses for cross-border payment and DPT business but has also established a comprehensive compliance system covering multiple fields such as payments, securities, custody, and derivatives. This localized and comprehensive compliance approach provides new possibilities for the development of Web3 in Singapore.

In the next decade, as regulations deepen in various countries, compliance capabilities will become a watershed in the industry. Those pioneers with pre-licensing, solid payment networks, and RWA issuance structures are expected to occupy advantageous positions in the new round of global digital financial order.