Web3 projects face challenges from new regulatory rules in Singapore, what should they do?

Recently, the Monetary Authority of Singapore (MAS) officially released the final regulatory framework for "Digital Token Service Providers" (DTSP), which will be fully implemented on June 30, 2025. This regulation is not just a new licensing requirement for token services; it is, in fact, a structural reconstruction of the operational logic of Web3 projects.

The new regulations clearly state that, regardless of whether customers are in Singapore or whether the business is on-chain, unlicensed enterprises will not be allowed to engage in any token-related activities. This means that as long as the project team is based in Singapore and is advancing token-related business, it is very likely to be considered as "operating in Singapore."

MAS is extremely cautious about issuing licenses for DTSP, and it is expected that only a very small number of applicants will be approved. This is not just a license bidding process; it is more like an active selection of project governance structures. Web3 project architectures that lack role separation, have unclear funding paths, and ambiguous responsibility divisions will lose their survival space in this round of cleanup.

In the face of tightened regulations in Singapore, many project teams first consider migrating to Hong Kong. However, the regulatory environment in Hong Kong is not lenient; it represents a different form of structured regulatory system. Hong Kong requires trading platforms to operate with a license and to provide compliance solutions at key points such as user admission, currency selection, and custody mechanisms. For other types of Web3 projects, Hong Kong has not yet established dedicated regulatory pathways and tends to favor projects with clear structures and adequate information disclosure.

Other alternative locations such as Dubai, Portugal, Seychelles, etc., either lack a mature financial regulatory framework, or have unclear and unsustainable compliance paths. They may be suitable for the short term, but it is difficult to establish a legal foundation for the medium to long term.

The new regulations from DTSP represent a broader regulatory trend: sovereign jurisdictions no longer accept the "registration piecemeal" Web3 architecture, and instead begin to define liability based on "where people are, where events occur." Therefore, the more pressing issue for Web3 projects is not "where to move," but how to build an architecture that can "exist in compliance."

In the new regulatory environment, project parties need to answer the following key questions: Who controls the decision-making for the issuance of tokens? Is the custody path and flow of user assets clear? Where are the actual controllers of the project located, and what responsibilities do they fulfill? Is there a mechanism in place that ensures transparent governance, structural isolation, and clear delineation of rights and responsibilities?

For investors, this regulatory evolution signifies an upgrade in judgment dimensions. In addition to focusing on the project's white paper and roadmap, it is also necessary to examine the project's "structural transparency": Does the token have a legitimate path and basis for issuance? Is the control structure clear? Has the founder faced excessive legal risks? Does the project have compliant financing, token issuance, and even exit mechanisms?

Overall, regulation is pushing the Web3 market into a new stage of "identity governance." Project teams can no longer rely solely on "narratives," but must deliver answers regarding structural design; investors are also no longer just looking at valuations, but are questioning whether projects are ready to accept regulatory scrutiny. The new DTSP regulations are just the beginning, and a larger wave of compliance is unfolding globally.