Singapore Cracks Down: Unlicensed Crypto Firms Face Regulatory Hammer

Singapore's financial watchdog just turned up the heat—unlicensed crypto operators now face a regulatory reckoning. The Monetary Authority of Singapore (MAS) isn't playing nice with firms skirting its licensing framework.

No more gray zones: The city-state's famed 'crypto-friendly' stance now comes with razor-sharp compliance teeth. Expect sweeps, fines, and the classic 'please explain' letters hitting inboxes by Q3.

Meanwhile, traditional finance execs are whispering 'I told you so' over S$20 cocktails—proving skepticism is the only free lunch in finance.

A Longstanding Commitment to Regulation

The MAS’s directive is not a sudden shift but the result of ongoing efforts dating back to early 2022. The Financial Services and Markets Act (FSMA), effective since then, requires any company offering digital token services, including overseas clients, to be licensed in Singapore. The recent actions merely reaffirm this requirement and close loopholes previously exploited by firms who avoided local licensing by serving only international customers.

Joshua Chu, a Hong Kong-based legal expert and co-chair of a regional Web3 association, explained that firms “playing regulatory pinball” by jumping through loopholes are running out of options. As jurisdictions like Singapore, Thailand, Dubai, and Hong Kong ramp up enforcement, there is simply no SAFE space left to sidestep regulatory demands.

Why Singapore Matters

Singapore has long been a hub for crypto firms seeking favorable regulatory conditions, largely due to its Payment Services Act (PSA), which mandates licensing for businesses serving local clients. However, with a relatively small population, many companies previously avoided licensing by targeting overseas markets. The MAS’s latest deadline shuts down this workaround, forcing firms to either comply fully or leave.

The regulator has maintained a steady message for years, emphasizing its role as a global financial center first, with crypto regulation evolving to meet international anti-money laundering (AML) and counter-terrorism financing standards. Patrick Tan, general counsel at ChainArgos, highlighted that firms must carefully consider the value and responsibilities attached to acquiring licenses amid tighter global rules.

Limited Options for Crypto Firms on the Move

As unlicensed firms face eviction in Singapore, many are scouting for alternative jurisdictions. Yet, the global landscape offers few truly lenient havens.

Hong Kong has emerged as a notable option. The city-state, long Singapore’s regional competitor, has been actively developing its crypto regulatory framework. However, the standards remain strict. For example, Hong Kong ordered all unlicensed crypto exchanges to exit the market in mid-2024. Licensing is limited and highly competitive, with only ten crypto licenses granted as of early June 2025 compared to Singapore’s 33 digital payment token licenses.

One example is Bybit, a crypto exchange recently expelled from Thailand, which is now seeking licenses in Hong Kong and Malaysia. However, this shift is more about compliance than escaping regulation, reflecting a broader acceptance that all major crypto hubs are tightening rules rather than loosening them.

Global Crackdown on Crypto Compliance

Singapore’s crackdown aligns with broader international efforts. The Financial Action Task Force (FATF), a global watchdog, has intensified its focus on crypto regulations, emphasizing transparency and adherence to AML standards. Countries like Thailand, the Philippines, and the UAE have all recently tightened their regulations, removing themselves from FATF’s gray list through rigorous compliance measures.

Dubai’s VIRTUAL Assets Regulatory Authority introduced stricter rules with a June 19 deadline, illustrating the fast pace of regulatory changes even in emerging crypto centers. Legal experts warn that despite Dubai’s friendly image, firms must exercise caution as it remains on probation following its removal from the gray list.

The End of Regulatory Arbitrage

For crypto firms, the era of hopping between lenient jurisdictions to avoid regulation is drawing to a close. The global network of regulators is closing gaps simultaneously, demanding transparency and accountability across borders. For companies, this means choosing licensed, compliant jurisdictions and adjusting business models to fit evolving rules.

The tightening environment also protects investors and the wider financial system from risks related to money laundering and terrorism financing, building a stronger, more sustainable crypto ecosystem in the long run.

What’s Next for Crypto Firms?

Firms displaced by Singapore’s enforcement are in a challenging position. As they weigh their options, few jurisdictions offer truly lax regulatory environments. Instead, companies will need to embrace compliance and transparency to survive and grow in the new regulatory landscape.

The industry can expect further regulatory actions from key hubs, including the European Union’s MiCA framework, the UK’s evolving crypto laws, and rules emerging in South Korea and Japan. These developments will continue to shape the global crypto market for years to come.