Overseas clients do not sever the Singapore regulatory nexus
Section 137 of the Financial Services and Markets Act distinguishes between entities: where a Singapore legal person carries on a business of providing digital token services to places outside Singapore, a licence is not automatically excluded merely because the business is in fact operated elsewhere; for individuals or partnerships, the question is whether the business is carried on from a place of business in Singapore. The exceptions under that section and the application of other financial laws must also be examined. Accordingly, the assessment is not merely whether there are Singapore clients; the place of incorporation, the place of business and the services provided should all be included in the legal analysis.
This is not an easily obtainable "overseas business licence"
In its official clarification of June 2025, MAS stated that DTSPs serving only overseas clients and involving DPTs or capital markets product tokens face higher money-laundering risks and supervisory difficulties, that the licensing threshold is high, and that licences will generally not be granted. The relevant regime took effect on 30 June 2025; affected businesses that have not obtained a licence must cease operations, and there is no general grace period that would allow new entrants to wait indefinitely. A business plan should not first assume that a licence can be obtained and then relocate clients and teams to Singapore.
Do not misread the overseas DTSP regime as a blanket prohibition on cross-border services
MAS also made clear that licensed service providers serving Singapore clients and already regulated under the Payment Services Act, the Securities and Futures Act or the Financial Advisers Act may also serve overseas clients, and their existing business capabilities do not uniformly disappear because of this regime. However, whether this pathway applies depends on the actual business, the licensed activities and the conditions, and a conclusion cannot be manufactured by arranging a nominal local client. Other tokens with only utility or governance uses should also not all be treated as DTSP tokens without classification.
Test the "headquarters in Singapore" plan against the actual operating entity
Assume a Singapore company directly contracts with overseas merchants, quotes prices and collects service fees, while an overseas team operates the wallets. It cannot conclude that Section 137 does not apply merely because "neither the personnel nor the wallets are in Singapore". If the Singapore company genuinely only performs group holding or internal support functions while client services are undertaken by other entities, the assessment should be redone based on the actual functions; at the same time, the overseas operating entities and access to target markets must also be examined. Changing the contracting party while retaining all actual control is not reliable compliance restructuring.
Recommended actions
- Set out the Singapore legal person's contracts, revenue, quotations, instructions and wallet permissions, and confirm whether it is carrying on a digital token service business.
- Check the entity type, place of business, token categories and existing licences against Section 137 and the corresponding exceptions, rather than merely counting client nationalities.
- Treat the overseas DTSP licensing policy as a precondition for the feasibility assessment and, where necessary, first explain the complete business facts to MAS.
- Design a justified cessation, transfer or restructuring plan for existing business, and review client authorization, asset handover and target-market access.
Information note: This article provides general information and does not replace legal advice based on specific facts.
References
- Financial Services and Markets Act 2022, section 137 — Singapore Statutes Online / Singapore Government
- MAS Clarifies Regulatory Regime for Digital Token Service Providers, 6 June 2025 — Monetary Authority of Singapore
