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 customers only overseas - no local license needed. That loophole is gone. Today, if you’re running a crypto exchange out of Singapore, even if your users are in Indonesia, Nigeria, or Brazil, you need a license from the Monetary Authority of Singapore (MAS). There are no exceptions. No grace periods. No gray areas.

Why Singapore Changed the Rules

Singapore didn’t make this change because it hates crypto. It made it because it couldn’t afford to be seen as a safe haven for shady operators. The 2022 collapse of Three Arrows Capital and Terraform Labs shook global markets. Both firms were based in Singapore. Both were serving international clients. And both operated without proper oversight. MAS realized that if a crypto business uses Singapore as a legal base to avoid regulation elsewhere, it puts Singapore’s entire financial reputation at risk.

The new framework, under the Financial Services and Markets Act (FSMA), closes that door. Now, any company handling digital tokens - whether it’s trading, custody, or exchange services - must be licensed by MAS, regardless of where its customers live. This isn’t just about money laundering. It’s about trust. Singapore wants to be the place where serious crypto businesses operate, not the place where others hide.

The Two License Types You Need to Know

There are two main licenses for crypto exchanges under Singapore’s new rules. Both fall under the Digital Token Service Provider (DTSP) category. The difference comes down to scale.

• Standard Payment Institution License: For smaller exchanges processing up to SGD 3 million in monthly transaction volume. Requires a minimum capital of SGD 100,000. You’ll need basic KYC, AML policies, and regular reporting to MAS.
• Major Payment Institution License: For larger platforms exceeding SGD 3 million monthly. Requires SGD 250,000 in minimum capital. You’ll face stricter audits, real-time transaction monitoring, enhanced risk controls, and mandatory external audits every year.

There’s also an Exempt Payment Service Provider category, but it’s only for very limited activities - like facilitating payments under SGD 5,000 per transaction. Most crypto exchanges don’t qualify.

The Standard License is the entry point. The Major License is what established players aim for. But both require the same core compliance infrastructure.

What MAS Actually Demands

Getting licensed isn’t about filling out a form. It’s about proving you’ve built a financial-grade system. Here’s what MAS expects:

• Full KYC and AML procedures: Every user must be verified with government-issued ID, proof of address, and source-of-funds checks. You can’t skip this for “small deposits.” MAS Notice PSN02 requires you to treat every user like a high-risk client.
• Real-time transaction monitoring: Your system must flag unusual activity - sudden large withdrawals, rapid transfers between wallets, or patterns matching known laundering schemes. You need automated tools, not manual reviews.
• Segregated customer funds: User crypto and fiat must be kept separate from company funds. You can’t use customer assets to cover operational costs.
• Comprehensive internal policies: Every process - from onboarding to withdrawals - must be documented. This includes how you handle hacks, freezes, or system failures.
• Annual audits: Both internal and external auditors must review your compliance, financial health, and security controls. MAS will ask for the reports.
• Business plan with financial projections: You need to show how you’ll stay solvent. MAS doesn’t just care about compliance - they care if you’ll still be around in 12 months.

You can’t wing it. If your compliance team is one person who also handles customer service, you’re not ready.

How Long Does It Take?

There’s no official timeline, but based on applicant feedback and industry reports:

• Standard License: 3 to 6 months with legal help
• Major License: 6 to 12 months

Why so long? MAS doesn’t just read your documents - they test them. They’ll ask for screenshots of your KYC flow. They’ll request logs of suspicious activity reports. They’ll interview your compliance officers. Many applicants get rejected on their first try because their policies sound good on paper but don’t match how the system actually works.

One exchange founder told us they spent four months rewriting their AML policy after MAS flagged a single line: “We may delay verification if volume is high.” MAS responded: “You don’t get to choose when to follow the law.”

Costs Are Higher Than You Think

The license fee itself is minimal - under SGD 5,000. But the real cost is in compliance:

• Legal and compliance consultants: SGD 50,000-150,000
• AML software and monitoring tools: SGD 10,000-40,000/year
• External auditors: SGD 20,000-60,000/year
• Internal compliance staff: At least 2 full-time roles at SGD 80,000-120,000 each

For a small exchange, total setup costs can hit SGD 200,000 before you even take your first trade. That’s why many retail-focused platforms have pulled out of Singapore entirely.

How Singapore Compares to Other Places

Compared to other global hubs, Singapore’s rules are tough but clear:

Comparison of Crypto Exchange Licensing Requirements

Region	Minimum Capital	Timeline	Offshore Clients Allowed?	Regulatory Clarity
Singapore	SGD 100,000-250,000	Immediate (no grace period)	No	High
European Union (MiCA)	€125,000-€350,000	2026-2027 rollout	Yes, with restrictions	Moderate
United States	Varies by state ($10,000-$500,000)	Multi-year, patchwork	Yes	Low
Switzerland	CHF 1-5 million	Flexible, case-by-case	Yes	High
Hong Kong	HKD 5 million+	2024-2025 implementation	Yes, with limits	Moderate

Singapore’s capital requirements are lower than Switzerland’s, but far stricter than Hong Kong’s on offshore activity. Unlike the U.S., there’s no state-by-state chaos. You get one rulebook, enforced by one agency.

Who’s Winning? Who’s Losing?

The new rules are reshaping the market:

• Winners: Large, well-funded exchanges like Coinbase and Binance (which applied for a license in 2024) now have a clear path. Institutional investors are moving assets to Singapore-based platforms because they know the money is safe.
• Losers: Small retail exchanges that relied on low-cost, offshore-only models. Many shut down. Others moved operations to places like the UAE or El Salvador.
• Neutral: Decentralized exchanges (DEXs) aren’t affected - because they’re not legal entities. But if you run a centralized platform that connects to DEXs, you’re still regulated.

The message from MAS is simple: If you want to operate in Singapore, you play by our rules - no exceptions, no shortcuts.

What Happens If You Don’t Apply?

The penalties aren’t just fines. They’re existential.

• Your website and apps can be blocked by Singapore’s ISPs.
• Local banks can freeze your corporate accounts.
• Founders and compliance officers can be personally liable for breaches.
• You’ll be barred from applying for any future license - ever.

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

Is It Worth It?

For some, yes. For others, no.

If you’re building a serious, long-term crypto business and want to attract institutional capital, Singapore’s license gives you credibility no other jurisdiction in Asia can match. You’ll be able to partner with banks, list on global exchanges, and attract top talent.

But if you’re a small team trying to run a low-cost exchange for casual traders? The cost and complexity are likely too high. You’ll be better off focusing on markets with lighter regulation - and accepting that you’ll never be seen as a trusted player in Asia’s financial center.

Singapore isn’t trying to be the biggest crypto hub. It’s trying to be the most trusted one.

What’s Next?

MAS has already signaled this is just the start. In public statements, they’ve said they’ll “generally not issue licenses” to firms that serve only overseas clients. That means even if you get licensed, you’ll need to prove you’re also serving Singapore-based users.

Expect more rules in 2026: tighter custody requirements, mandatory insurance for digital assets, and possibly limits on leverage and derivatives trading. The bar keeps rising.

If you’re serious about crypto in Asia, you need to think like a bank - not a startup.