Crypto Exchange Licensing Requirements in Singapore: What You Need to Know in 2025

Before June 30, 2025, some crypto exchanges could operate from Singapore while serving only overseas customers - no local license needed. That loophole is gone. Now, if you're running a crypto exchange out of Singapore, even if your users are in Brazil, Nigeria, or Canada, you must be licensed by the Monetary Authority of Singapore (MAS). There are no exceptions. No gray areas. No grace periods. If you’re not licensed, you’re shut down.

Why Singapore Changed the Rules

Singapore didn’t make this move because it hates crypto. It’s the opposite. The city-state wants to be a global hub for digital assets - but only if it’s done right. The collapse of Three Arrows Capital in 2022 and the TerraUSD crash that same year shook confidence. These weren’t local failures; they were global disasters that traced back to Singapore-based entities operating without oversight. MAS saw it clearly: a crypto firm based in Singapore, serving foreign clients, but ignoring local rules, was a threat to the country’s financial reputation.

The new Financial Services and Markets Act (FSMA), effective June 30, 2025, closed that door. Now, every Digital Token Service Provider (DTSP) - whether it’s a small exchange or a giant platform - must be licensed. No more hiding behind offshore clients. If you’re physically in Singapore, you play by Singapore’s rules.

Two License Types: Standard and Major Payment Institution

Under the Payment Services Act 2019 (PSA), which still applies alongside FSMA, there are two main licenses for crypto exchanges:

• Standard Payment Institution License: For businesses processing up to SGD 3 million in monthly transaction volume. Requires a minimum capital of SGD 100,000. This is the entry point for smaller exchanges or those testing the market.
• Major Payment Institution License: For operators exceeding SGD 3 million monthly. Requires SGD 250,000 in minimum capital. This comes with stricter controls: deeper audits, enhanced risk management, and continuous monitoring.

There’s also an Exempt Payment Service Provider category, but it’s not for exchanges. It’s for very low-risk activities like peer-to-peer payments under strict limits. If you’re trading Bitcoin, Ethereum, or any token, you’re not exempt.

What the License Actually Requires

Getting licensed isn’t about filling out a form. It’s about proving you can run a secure, transparent, and compliant business. Here’s what MAS demands:

• Full KYC and AML Procedures: Every user must be verified. Not just ID checks - you need proof of address, source of funds, and ongoing transaction monitoring. MAS Notice PSN02 sets the standard. It’s the same bar as banks.
• Written Policies: You need detailed documents covering how you handle customer funds, process trades, detect fraud, and respond to suspicious activity. These aren’t suggestions. They’re mandatory.
• Risk Assessments: You must identify every possible threat - from hacking to money laundering to insider fraud - and show how you’ll stop it. This includes cybersecurity plans, cold storage protocols, and insurance coverage.
• Annual Audits: Both internal and external audits are required. External auditors must be approved by MAS and report directly to them.
• Capital Proof: You must show you have the money. Not just on paper - bank statements, financial guarantees, or verified funding sources. MAS checks this.

How Long Does It Take?

There’s no quick path. The timeline depends on your size and how prepared you are.

• Standard License: 3 to 6 months with a good compliance team.
• Major License: 6 to 12 months. MAS digs deeper. They’ll ask for more, check again, and request revisions.

Many applicants get rejected on the first try. Common mistakes? Incomplete policies, vague risk assessments, or unclear fund handling procedures. Some companies spend over SGD 100,000 on legal and consulting fees just to get their application right.

How Singapore Compares to Other Countries

Singapore’s approach sits between two extremes. China banned crypto exchanges outright. Some offshore islands like the Cayman Islands have almost no rules. Singapore chose a middle path: strict but fair.

Compare it to the EU’s MiCA regulation - it gives firms years to adapt. Singapore gave zero. Compare it to the U.S. - where each state has different rules and the SEC is unpredictable. Singapore offers one clear national standard.

Switzerland requires millions in capital for similar licenses. Singapore’s SGD 100,000-250,000 range is much more accessible for mid-sized players. That’s intentional. MAS wants serious operators, not fly-by-night shops.

Who’s Struggling? Who’s Thriving?

Smaller exchanges are feeling the heat. Many didn’t have compliance teams. They relied on offshore clients to avoid regulation. Now, they’re out of business. Some moved operations to Dubai or Malaysia. Others shut down entirely.

Larger exchanges - like those backed by venture capital or with existing financial infrastructure - welcomed the clarity. They can afford the lawyers, the auditors, the systems. For them, licensing isn’t a cost - it’s a competitive advantage. It signals trust.

Reddit threads and crypto forums are full of complaints. Users report applications taking over a year. One exchange owner said, “We spent 11 months and three lawyers just to get our AML policy approved.”

But institutional investors? They’re excited. They now know that a Singapore-licensed exchange has real oversight. That’s rare in crypto.

What Happens If You Don’t Apply?

MAS doesn’t warn twice. If you’re operating without a license after June 30, 2025, you’re breaking the law. Penalties include:

• Fines up to SGD 1 million
• Imprisonment for executives
• Asset freezes
• Public blacklisting

MAS has already taken action against unlicensed platforms. They don’t just shut them down - they publish the names. Your reputation is gone.

The Future: More Rules, Not Less

MAS has said it clearly: “We will generally not issue a license for operations serving only overseas clients.” That’s a warning to offshore-focused exchanges. Even if you think you’re not targeting Singapore, if you’re based here, you’re in scope.

Expect more rules soon. MAS is already looking at:

• Stablecoin reserve transparency
• Real-time transaction reporting
• Minimum cybersecurity standards
• Disclosure requirements for token listings

Singapore isn’t trying to stop crypto. It’s trying to make it safe, trustworthy, and sustainable. The message is simple: if you want to operate here, you play by our rules - no exceptions.

What Should You Do Now?

If you’re running a crypto exchange in Singapore:

1. Stop assuming you’re exempt because your users are overseas.
2. Review your transaction volume. Are you over SGD 3 million/month? Then you need a Major License.
3. Hire a Singapore-based compliance consultant with crypto experience. Don’t try to do this alone.
4. Start gathering documents: KYC policies, risk assessments, capital proof, audit reports.
5. Apply now. Even if you think you’re ready, the process takes months.

If you’re thinking of launching a crypto exchange:

• Don’t base it in Singapore unless you’re ready to meet the standards.
• Consider if you can afford the capital, the legal fees, and the ongoing compliance costs.
• Ask yourself: Is this worth it? Because once you’re licensed, you’re locked in - no turning back.

Frequently Asked Questions

Final Thoughts

Singapore isn’t making crypto harder to do - it’s making it harder to cheat. The licensing requirements are tough, but they’re clear. If you’re serious about building a trustworthy crypto business, this framework gives you credibility no other market in Asia can match. But if you’re looking for a quick, low-cost way to run an exchange with minimal oversight - Singapore is no longer the place.

The message from MAS is loud and simple: integrity over shortcuts. The companies that survive here won’t be the ones with the flashiest websites or the most aggressive marketing. They’ll be the ones with the cleanest books, the strongest compliance teams, and the quiet confidence that comes from knowing they’re playing by the rules.