This note seeks to highlight several key considerations for business that provide services especially for digital payment tokens. Given the very high hurdle to obtaining a FSMA licence indicated by MAS, we believe the more relevant consideration for businesses is whether its activities fall outside FSMA.
Territorial scope of FSMA
MAS stated in its recent 30 May 2025 statement announcing the commencement date of the DTSP Provisions that factors such as whether a DTSP’s front-office or customers are overseas will inform whether digital token services are “provided outside Singapore”.
In a 6 June 2025 Statement, MAS further sharpened its comments to state that DTSPs providing digital token services solely to overseas customers must be licensed under FSMA.
MAS maintains that this position has been consistently communicated since 14 February 2022 (when it first introduced FSMA into Parliament, and responded to earlier consultation exercise) and reiterated in October 2024 and May 2025.
However, in our opinion, MAS’ earlier responses, such as its Response to Feedback on its Consultation Paper on a New Omnibus Act for the Financial Sector of 14 Feb 2025 had pointed to greater nuance and ambiguity, and perhaps even a different legal position.
One consideration for businesses therefore is to carefully consider which statutory regime in fact applies to it on territorial grounds, of course giving full regard to MAS’ statements reflective of its current interpretation of the scope of FSMA and the PS Act (which we believe to have in fact evolved after the enactment of FSMA, with respect to MAS’ assertions) as well as the technical merits of its position based on its own specific facts and circumstances.
Are my business’s activities within the expanded scope of regulated activities under the PS Act (from April 2024) and FSMA (from 30 June 2025)
When first enacted in 2019, the PS Act only regulated a narrow range of digital payment token services, namely buying and selling DPTs and operating a DPT exchange.
However, the PS Act was considerably expanded with effect from April 2024 to cover a much broader range of digital payment token services (and this scope now aligns closely with FSMA). These include (amongst other things):
- Arranging for transmission of digital tokens between accounts.
- Inducement to enter agreements to buy/sell DPTs.
- Custody or safeguarding of digital tokens/instruments where the provider has control of the digital tokens/instruments.
Businesses especially those which provide operational services from Singapore may wish to (re)assess whether their activities with touch points to Singapore fall within the above categories of regulated activities.
Advisory Services under FSMA vs FA Act
FSMA covers advice on digital tokens, including directly or through publications, analyses, and reports.
By contrast, the FA Act regulates advice on “investment products”, which excludes many types of digital tokens.
Businesses providing advisory services in relation to digital tokens may wish to (re)assess whether FSMA or FA Act applies, based on the nature of the tokens and the territorial scope of their business.
Technical Service Provider Exemption
FSMA excludes services by “technical service providers” that do not possess money or digital tokens, such as:
- Data processing/storage
- IT security/authentication
- Network or device maintenance
The PS Act provides for a similar exemption, but interestingly only requires no money possession, and makes no reference to possession of digital tokens.
The expression “technical service provider” is not defined, so businesses should carefully assess whether their activities qualify for this exemption as being technical in nature only, including whether they possess money and (where FSMA applies to them) digital tokens.
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