On 30 May 2025, Monetary Authority of Singapore (MAS) issued a Response to Feedback Received Consultation Paper for Digital Token Service Providers (DTSPs) and released a series of Notices and Forms relating to DTSPs. DTSPs are defined as individuals, partnerships or Singapore corporations that are operating from a place of business in Singapore or formed or incorporated in Singapore but carry on a business of providing digital token services outside Singapore.

As DTSPs face heightened money laundering and terrorism financing (ML/TF) risks due to their internet-based and cross-border operations, this could harm Singapore’s reputation if misused for illicit activities. As a result, MAS will adopt a cautious approach to licensing DTSPs under section 138 of the FSM Act, with very limited exceptions.

Most importantly, no transitional arrangements will be provided, requiring DTSPs subject to licensing under section 137 of the FSM Act to suspend or cease overseas digital token services by 30 June 2025, when the relevant FSM Act provisions take effect, with non-compliance resulting in penalties under section 137(6) of the FSM Act.

1. New Licensing Regime for Digital Token Service Providers

This framework for DTSPs represents a significant step in Singapore’s approach to regulating digital assets, with several key features:

• License Application:
• Licenses granted only in “extremely limited” cases with stringent criteria (e.g., economic viability, compliance with The Financial Action Task Force (FATF) standards).
• No transitional period—existing DTSPs must cease operations unless licensed.
• AML/CFT Rules:
• Mandatory customer due diligence (CDD), even for pre-license clients.
• Restrictions on third-party reliance (e.g., no reliance on payment service providers).
• Value transfer tracking (originator/beneficiary details required).
• Financial & Operational Requirements:
• Minimum capital of S$250,000 for all DTSPs.
• Resident director/partner in Singapore.
• Technology risk management (e.g., max 4-hour downtime for critical systems).
• Reporting & Compliance:
• Monthly regulatory returns (transaction volumes, high-risk customers).
• Public accessibility (staffed office 10 days/month).

2. Forms and Notices

MAS published the various Forms and Notices in relation to the licensing and operations of a DTSP.

1. Form 1 – Application for a DTSP Licence
2. Form 2 – Approval of CEO, Director, Partner and Manager of Digital Token Service Providers
3. Form 3 – Audit Report for Digital Token Service Providers
4. FSM-N27 Prevention of Money Laundering and Countering the Financing of Terrorism
5. FSM-N28 Reporting of Suspicious Activities and Incidents of Fraud
6. FSM-N29 Submission of Regulatory Returns
7. FSM-N30 Technology Risk Management
8. FSM-N31 Cyber hygiene
9. FSM-N32 Conduct
10. FSM-N33 Disclosures and communications

These notices establish a comprehensive regulatory framework for DTSP operations in Singapore.

What’s Next?

With MAS tightening regulations for DTSPs, firms must act swiftly to comply by the 30 June 2025 deadline or suspend or cease their business unless they get licenced. DTSPs need to do:

• Update all licensing documents to meet MAS’s new compliance requirements.
• Prepare digital token service systems for mandatory 4-hour downtime limits.
• Submit all application forms in MAS-approved formats.
• Schedule independent audits for annual compliance verification.

Key deadline: Full compliance required by 30 June 2025
Submission portal: AMLCFT@mas.gov.sg

How Can We Help?

We can assist you with:

• Reviewing and updating your licensing applications and compliance frameworks
• Preparing and submitting Forms to MAS in required formats
• Aligning your AML/CFT policies with MAS Notices
• Conducting pre-audit checks for technology risk and cybersecurity requirements

Contact Us today to discuss how we can provide the risk and compliance advisory solutions for you. Find out more here.