Singapore’s Web3.0 Ecosystem Is Facing a “Battle Royale” as Capital Retreats and Regulation Tightens

#Singapore #Web3.0 #crypto

Come June 30, 2025, Web3.0 in Singapore will fundamentally change.

A newly implemented regulation marks the official end of Singapore’s honeymoon with the crypto industry. In the past few years, this Asian financial hub attracted waves of Web3 entrepreneurs, capital, and talent with its friendly policy environment. Now, it’s staging a crypto version of a “battle royale” — where it’s not about who runs fastest, but who can survive the regulatory hammer.

So what exactly is happening in this “battle royale”? Why has Singapore, once a haven with “open ports and free winds,” suddenly become so strict and heavy-handed?

Let’s talk about the real reason behind this regulatory shift.

From Welcome Mat to Filter Gate: Singapore Starts “Choosing Who Gets In”

Let’s start with the key point: beginning June 30, 2025, the new regulation for Digital Token Service Providers (DTSPs) will officially take effect. This isn’t some sudden, knee-jerk decision. In fact, Singapore has been laying the groundwork since the 2020 Payment Services Act. The real turning point was the Financial Services and Markets Act passed in 2022, which laid the foundations for this “endgame-level” regulatory framework. The new DTSP rules make it crystal clear:

Whether you’re targeting local or overseas clients;
Whether you’re a big firm or a freelance advisor;
As long as you’re a Singapore-registered entity or individual providing digital token services —

You must be licensed. There’s no grace period. Once June 30 hits, operating without a license becomes illegal — subject to fines, company deregistration, or even criminal charges.

This is a major regulatory leap forward.

The Standards Are Brutal — Small Players Need Not Apply

This DTSP license is not something anyone can just apply for:

Minimum paid-up capital: 250,000 SGD (≈ 1.35 million RMB);
If you’re involved in custody, leverage, or derivatives: even higher capital thresholds;
Annual licensing fee: 10,000 SGD;
At least one resident executive director or partner in Singapore;
Controllers must have financial backgrounds and clean reputations;
You need a complete overseas client structure and a compliance review system;
Thinking of applying? MAS has made it clear: “Licenses will only be granted in exceptional cases.”

To sum it up in one sentence: this is a license with a “bar so high it’ll make grassroots cry.”

Why So Strict All of a Sudden? Two Words: Regulatory Regret

Singapore isn’t “changing its face” overnight — it’s “deeply regretting” its past leniency.

Flashback to 2021, when Web3 was booming and Singapore was one of the first countries to send friendly signals to the global crypto space. Giants like Binance, FTX, and Crypto.com flocked in, encouraged by the government’s “innovation-first” stance and faith in market self-regulation.

The result? FTX imploded. Luna collapsed. Singapore’s sovereign fund Temasek lost $275 million. The nation’s reputation was dragged through the mud, and investors were burned. The global media grilled Singapore: How did this even pass review? Deputy PM Heng Swee Keat (now Prime Minister) publicly apologized, admitting the nation’s credibility had taken a hit.

From that moment, the Monetary Authority of Singapore (MAS) changed course — becoming realistic, conservative, and harsh. After all, a financial center without credibility means nothing. Even if you attract waves of Web3 entrepreneurs, it’s all just short-term hype.

The Regulatory Message Is Clear: Only Strong Players Welcome, Everyone Else Step Aside

The logic of the DTSP regulation is simple and blunt: Singapore welcomes Web3 — but only for players with capital, compliance capability, and risk endurance. Retailers, influencers, freelance advisors? Step aside.

Previously, many projects set up Singapore entities just to serve overseas clients and evade oversight. The new DTSP regulation slams that loophole shut: if you’re registered in Singapore, you must be licensed, regardless of where your clients are. And it goes even further — if you provide matching services, custody, or even consult on whitepapers, you need a license.

MAS even clarified that only remote employees of overseas firms working from home might be exempt. Even KOLs can fall under regulatory scope. That’s how meticulous this is.

According to official data, the companies that have already obtained licenses (including payment services licenses) include global giants like Coinbase, Circle, Ripple, OKX, BitGo, Anchorage, HashKey, Blockchain.com.

These firms either have strong compliance infrastructures or come directly from traditional financial institutions. As for smaller teams, solo founders, or short-term project operators? They either can’t meet the capital threshold, or lack the compliance chops — leaving them no choice but to retreat or abandon the Singapore market.

It’s a silent culling. With one stroke, fewer players remain at the table — but those that do, are massive.

From a Regulatory Standpoint, Singapore’s Logic Is Sound

If you want to run a crypto financial service, raise funds, or provide custody in this country — even if your clients are Americans — you’re a Singapore-registered business, so you follow Singapore laws.

FTX’s collapse taught every government a hard lesson: no matter how “legit” you sound, without regulation, you might run off with the bag.

And it’s not just FTX. In 2023, Singapore cracked a record-breaking money laundering case involving 3 billion SGD, much of it laundered via crypto assets. This shook the government. On top of that, the FATF (Financial Action Task Force) flagged Singapore for “inadequate cross-border VASP supervision” and threatened to place it on a greylist watch.

Under mounting global scrutiny, Singapore had no choice but to demonstrate a firm stance.

Conclusion: Compliance Is the Main Theme — Big Players Own the Table

This “battle royale” is simply the Web3 industry transitioning from Wild West to regulated order. Singapore is drawing a hard line with its brutally strict DTSP regime: comply and you’re in, fail and you’re out.

Will this make the crypto ecosystem more boring? Yes — it will curb some degree of “innovation freedom.”
But it will also make the entire Web3 space more stable and sustainable. A market that constantly explodes, rug pulls, and hides behind buzzwords isn’t going to last.

The ones who survive and adapt to high regulatory demands — those big institutions — will become the real infrastructure providers of Web3.

The tide of Web3 is still surging.But not everyone will be able to “take off” again.