Linkedin
Facebook
Email
more
Overview
The DTSP (Digital Token Service Providers) regime under Part 9 of the Financial Services and Markets Act 2022 has now been in force for one year, since 30 June 2025. The Monetary Authority of Singapore’s (MAS) restrictive stance of granting licences only in “extremely limited circumstances” has held firm.
Supervision does not end with licensing. The May 2026 revocation of Bsquared Technology’s Major Payment Institution licence - a Payment Services Act case, not a DTSP case - shows that MAS continues to test licensees’ governance, outsourcing arrangements and disclosure quality after approval, across its digital asset licensing perimeter.
The practical lesson for boards is lifecycle discipline: the standards assessed at application must remain demonstrably true, and be evidenced, throughout the life of the licence.
Individual accountability is also in focus. MAS has stated that it is reviewing the responsibilities of Bsquared’s key officers. Directors, CEOs and MLROs should assume personal exposure where governance fails.
The road to Singapore’s DTSP licensing framework
On 30 June 2025, Part 9 of the Financial Services and Markets Act 2022 (“FSM Act”) came into force, together with the Financial Services and Markets (Digital Token Service Providers) Regulations 2025, AML/CFT Notice FSM-N27, and related notices and guidelines. The regime closed a long-identified gap: Singapore-incorporated entities, and individuals or partnerships operating from a place of business in Singapore, that provided digital token services solely to customers outside Singapore had previously been beyond the reach of the Payment Services Act 2019 (“PS Act”). They must now obtain a licence or cease those activities.
That legal change was accompanied by a clear supervisory message. MAS made its position clear: there would be no transitional period. In-scope providers without a licence were required to suspend or cease overseas-facing digital token services by 30 June 2025. MAS also stated that DTSP licences would be granted only in extremely limited circumstances, reflecting its assessment that entities with a Singapore incorporation but no Singapore customer base present elevated money laundering, terrorism financing and reputational risk.
The entry bar, for the applicants MAS entertains, is deliberately high:
- Base capital of S$250,000
- Application fee of S$1,500 and annual licence fee of S$10,000
- Legal opinion on the applicant's business model, submitted with the application
- Independent external auditor's assessment of technology and cyber risk controls, following in-principle approval
- Suitably qualified compliance officer at management level
- Minimum physical-presence requirements at the Singapore place of business
One year on, the regime has done what it was designed to do. The population of Singapore-based, overseas-only token businesses has largely restructured, relocated, ceased operations or brought itself within an existing licensing regime. Entities already licensed under the PS Act, the Securities and Futures Act 2001 or the Financial Advisers Act 2001 for the relevant activity remain exempt from a separate DTSP licence for that activity. That is why, for most operating firms, the practical centre of gravity remains the PS Act and MAS’s supervision of licensed digital payment token (“DPT”) service providers.
What the first year tells us: the licence is a lifecycle, not an event
The most instructive supervisory development of the year did not arise under the DTSP regime at all. On 20 May 2026, MAS announced the revocation of Bsquared Technology Pte Ltd’s Major Payment Institution licence, effective 14 May 2026, ending its permission to provide DPT services under the PS Act. We examined the case findings in detail in our earlier commentary.
For present purposes, three public-record features matter because they illuminate how MAS supervises across its entire digital asset perimeter, under both the PS Act and the FSM Act:
First, the trigger was an onsite inspection, not a market event. MAS’s 2025 inspection identified significant weaknesses in risk management and conflict-of-interest policies, and failures to meet the Guidelines on Outsourcing in arrangements with related entities. The firm had been licensed for roughly sixteen months. Firms should assume that inspection-readiness is a standing obligation from day one of the licence, not something that matures over time.
Second, information integrity was central. MAS found that the firm had provided false or misleading information in material particulars on multiple occasions, from the licence application through the inspection itself. The application file is not a commercial pitch; it forms part of the continuing basis on which MAS assesses fitness and propriety. Statements made at application remain live representations.
Third, accountability follows the firm’s officers. MAS stated it is reviewing the responsibilities of the firm’s key officers. Boards should read this as confirmation that governance failures will be examined at the level of individuals, not only entities.
None of this is unique to the PS Act. The DTSP framework embeds the same lifecycle logic: licensees must notify MAS of changes to circumstances or business models affecting compliance with licensing criteria, maintain ongoing financial requirements, meet AML/CFT obligations under FSM-N27, comply with technology risk management requirements, and submit to audit. A DTSP licence can lapse or be revoked on grounds that mirror the supervisory expectations the firm failed to meet.
What it means for your firm
For founders and executives of licensed DPT firms, the first year of the DTSP era confirms that Singapore’s strategy is credibility through selectivity. The licence you hold is an asset precisely because MAS enforces the standards attached to it. The operational question is no longer “did we pass licensing?” but “could we evidence, today, that every representation in our application file remains true?”
For aspiring applicants and foreign groups hubbing in Singapore, the perimeter analysis comes first: whether your activities fall under the PS Act (Singapore-facing DPT services), the SFA (capital markets products) or FSM Act Part 9 (Singapore-based, overseas-only token services) determines everything downstream. Where Part 9 is engaged, plan on the basis that a licence is unlikely to be granted and structure accordingly, including by considering where front-office functions and customers actually sit.
For MLROs and compliance officers, the message is evidential. Policies are necessary but not sufficient; MAS inspections test implementation. Board minutes, compliance monitoring records, outsourcing due diligence, related-party arrangements, risk assessments, incident logs and the accuracy of every submission to MAS are the substance of inspection-readiness.
For boards and audit committees, the next meeting should address five questions:
1. When did we last verify, line by line, that our licence application representations remain accurate, and who owns that review?
2. Are our related-party and outsourcing arrangements documented, monitored and auditable to the standard of MAS’s Guidelines on Outsourcing?
3. Could we withstand an unannounced onsite inspection this quarter, and where are our controls most exposed?
4. Who reviews MAS submissions for accuracy and internal consistency before they are sent, and is that review evidenced?
5. Do our key officers understand their personal accountability, and is our governance documentation adequate to demonstrate that they have discharged it?
One year in, the message from Singapore’s supervisor is consistent: entry is selective, and the standards assessed at the gate apply for as long as the licence is held. Firms that treat inspection-readiness as a standing discipline, rather than a licensing milestone, will be best placed to maintain regulatory trust. If your organisation is reviewing its licensing position or ongoing compliance framework, connect with us today to experience the power of being understood.
For more information, get in touch with our specialists
Kendrick Choo
Associate Director, Technology Consulting
E: KendrickChooXH@rsmsingapore.sg
Christopher Neo
Manager, Digital Assets Advisory
