The city-state’s central bank last month said digital token service providers (DTSPs) that served only overseas clients must have a licence to continue operations past June 30 -- or close up shop.
Singapore, a major Asian financial hub, has taken a hit to its reputation after several high-profile recent cases dented trust in the emerging crypto sector.
“The money laundering risks are higher in such business models and if their substantive regulated activity is outside of Singapore, the MAS is unable to effectively supervise such persons,“ the central bank said, referring to firms serving solely foreign clients.
“With the new DTSP regime, MAS is reinforcing that financial integrity is a red line,“ Chengyi Ong, head of Asia Pacific policy at crypto data group Chainalysis, told AFP.
Law firm Gibson, Dunn & Crutcher said in a comment on its website that the move will “allow Singapore to be fully compliant” with the requirements of the Financial Action Task Force, the France-based global money laundering and terrorist financing watchdog.
Its Singaporean co-founder Su Zhu was arrested at Changi Airport while trying to leave the country and jailed for four months.
Singapore-based Terraform Labs also saw its cryptocurrencies crash dramatically in 2022, forcing it to file for bankruptcy protection in the United States.
South Korean Do Kwon, who co-founded Terraform in 2018, was arrested in 2023 in Montenegro and later extradited to the United States on fraud charges related to the crash.
He had been on the run after fleeing Singapore and South Korea.
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