Singapore's Web3 Exodus: How New Regulations Will Reshape the Crypto Landscape

Singapore’s Web3 Exodus: The Regulatory Reckoning

For years, Singapore’s ‘light-touch’ approach made it the darling of crypto entrepreneurs. But as the dust settles from Terraform Labs and 3AC’s collapses, MAS has declared war on regulatory arbitrage. Here’s my analysis of the coming seismic shift.

From Sandbox to Iron Fist

The Payment Services Act (PSA) once lured firms with its regulatory sandbox—a playground where innovation thrived under MAS’s watchful eye. Approval rates above 80% in 2020 felt like a golden era. Fast forward to 2024: sub-10% approval rates reveal MAS’s new mantra—’trust, but verify with extreme prejudice.’

The DTSP Framework: No More Free Rides

Come June 2025, the DTSP framework under FSMA 2022 will demand:

• Substantial operations: No more ‘brass plate’ companies
• Global compliance: Jurisdictional loopholes? Extinct
• Enhanced AML/CFT: Forensic-level transaction tracking

One client joked it’s easier to get into Oxford than secure a DTSP license now. I didn’t laugh—because it’s probably true.

The Great Migration Debate

While Hong Kong and Dubai woo displaced firms, remember:

1. Their regulations are evolving too (read: future headaches)
2. Moving infrastructure costs more than most startups’ runway
3. MAS’s reputation still carries weight in institutional circles

The irony? This crackdown might actually strengthen Singapore’s position—by filtering out speculators leaving only serious players.

Survival Strategies for Web3 Firms

From my advisory work, here’s what works:

• Merge compliance into product design (yes, it’s possible)
• Hire ex-regulators (they speak MAS’s language)
• Partner with licensed custodians (the ‘training wheels’ approach)

As one founder told me: ‘We spent $2M building compliance tech. Cheaper than relocating.’ Wise words in this new era of accountable crypto.