Singapore to ‘Thread the Needle’ as Crypto Licensing Rules Take Effect

Singapore’s crypto licensing deadline arrived today, forcing dozens of digital asset firms to either shut down or face steep penalties, as regulators closed a long-standing loophole that allowed overseas-only services to operate without oversight.

The Monetary Authority of Singapore (MAS) set June 30 as the hard cutoff for compliance: no extensions, no grace period.

Firms offering crypto and digital asset services to foreign clients from the country would need to hold proper licenses, without which they’d be forced to “cease” operations, according to a deadline reminder issued earlier this month.

Enacted through the country’s Financial Services and Markets Act, the new framework mandates anti-money laundering controls, local compliance officers, and cybersecurity audits, with penalties including fines up to $185,000 and possible jail time.

Yet the move “isn’t about restricting the industry,” but about “protecting the integrity of the regulatory framework,” Calvin Shen, chief commercial officer at Hong Kong-based digital asset financial institution Hex Trust, told Decrypt.

The regulator had signaled this move for months, responding to industry feedback from consultation sessions since October last year.

Despite the tighter requirements, “Singapore continues to shape the global conversation on what credible, substance-based regulation looks like,” Shen said.

However, the move appears to have triggered an industry exodus.

Smaller firms have already shut down operations, while major players, including Bitget and Bybit, are reportedly exploring relocations to Dubai or Hong Kong, where regulatory frameworks appear more accommodating, per reports from Bloomberg and Financial Times.

Decrypt has reached out to Bitget and Bybit to confirm their stance and will update this article should they respond.

Threading the needle

The MAS’s approach can be seen as extending beyond standard international compliance, according to Chengyi Ong, head of policy for APAC at blockchain data platform Chainalysis.

The regulator’s decision is “a matter of supervisory risk appetite, rather than international alignment,” Ong told Decrypt, noting that it was prompted by discomfort over licensing entities whose activities are “conducted entirely offshore, with only a limited nexus” to the country.

The timing proves particularly challenging for affected firms, as the authority positions itself through its mandate to maintain Singapore’s reputation, even if it means losing crypto businesses to competing jurisdictions.

While it “sharpens the focus” for how Singapore could “balance the tension between crowding in business and managing risk,” Ong notes that other hubs might have to face the same questions and “decide how best to thread the needle.”

Shen echoed this point, noting how financial centers are “aligning on core principles like local presence, accountable governance, and enforceable standards.”

While other jurisdictions may take a softer, more welcoming stance, Singapore’s model “brings structure and clarity,” Shen said, adding that it reinforces the idea that licensing “should not just be about form, but about function,” to ensure that firms “are not only compliant on paper, but operationally sound in practice.”