As global regulators scramble to restore trust in digital finance, Singapore is charting a path that few others dare to follow. While much of the crypto world eyes a rebound driven by new capital, token launches, and looser rules, Singapore is moving in the opposite direction—tightening consumer protections, raising compliance costs, and placing a clear ceiling on speculative retail access. With new rules coming into force this June, including mandatory risk tests and bans on credit-funded trading, the city-state is betting that its reputation for credibility and regulatory maturity will outweigh any short-term loss in market share. But in a region where Hong Kong is rapidly liberalizing access and courting crypto exchanges with open arms, the question facing Singapore is no longer whether its rules are strong enough. It is whether they are still attractive.

Singapore is no stranger to financial reinvention. Over the past two decades, it has transformed itself from a traditional banking hub into one of the world’s leading centers for fintech, private capital, and digital innovation. Now, as the global crypto sector emerges from the wreckage of FTX, Terra/Luna, and a wave of retail losses, Singapore is once again recalibrating. This time, the pivot is not toward expansion but toward guardrails.

Beginning in October 2024, and continuing with a second phase set for June 2025, the Monetary Authority of Singapore (MAS) is enforcing a sweeping package of rules on crypto firms. These measures require licensed digital payment token (DPT) providers to ring-fence customer assets, conduct investor risk assessments, and ban the use of credit, leverage, and promotional incentives for retail clients. The goal is clear: limit speculation, raise the bar for investor knowledge, and insulate ordinary consumers from the worst of crypto volatility.

What makes Singapore’s approach notable is not just its ambition, but its contrast. While cities like Hong Kong are fast-tracking licenses and reopening retail access to digital asset trading, Singapore is opting for restraint. It has blocked crypto purchases using locally issued credit cards and tightened oversight of stablecoin issuers, demanding full reserve backing and same-day redemption rights for those seeking the MAS-regulated stablecoin label. These policies reflect a growing belief that crypto cannot be treated like just another consumer product.

Beneath the regulatory shift lies a bigger strategic question: Can Singapore maintain its edge as Asia’s most trusted destination for institutional crypto and fintech players while signaling to large swaths of the retail market to stay away? The city-state has built its brand on stability, rule of law, and policy foresight. But that brand is now being tested by a new kind of arms race, one where crypto exchanges and fintech startups weigh not only capital access and infrastructure, but also regulatory friction.

MAS has made its stance unambiguous. It is not interested in chasing hype. It has warned that cryptocurrencies are “highly volatile and speculative,” and that investors risk “substantial losses” if they use debt to trade them. Far from apologizing for its cautious stance, the regulator has leaned into it, arguing that the future of crypto depends not on rapid adoption, but on trust.

In the months ahead, Singapore’s crypto policies will face scrutiny from industry players, competitors, and consumers alike. But one thing is already certain: the city’s new rules are not about turning away from innovation. They are about trying to keep it honest.

Guardrails in Two Acts: Phasing In Singapore’s Crypto Rules

Two of the most consequential pillars of Singapore’s new crypto regime are already reshaping the industry’s expectations: mandatory segregation of customer assets from corporate funds, and a sweeping risk awareness test for retail investors. These rules, introduced in two phases across 2024 and 2025, mark a decisive pivot in how the Monetary Authority of Singapore (MAS) intends to regulate digital assets—not just through oversight, but by embedding structural safeguards into the system’s very design.

The first phase began in October 2024, requiring all licensed digital payment token (DPT) firms to ring-fence customer assets in segregated trust accounts. These assets must be fully isolated from corporate holdings and protected through daily reconciliation and independent oversight. What may seem like a technical safeguard is, in fact, a direct response to the failures of platforms like FTX, where client funds were commingled, misused, and lost. MAS’s rule ensures that firms cannot tap retail funds for operational liquidity or speculative ventures, moving crypto governance closer to the standards of traditional financial institutions.

At the same time, MAS mandates firms to disclose the exact safeguarding mechanisms to users and outline recovery terms in the event of insolvency. Firms that serve as trading venues, custodians, and wallet providers simultaneously must establish internal firewalls to reduce conflicts of interest. This reflects a deeper shift in regulatory thinking: crypto platforms can no longer operate under startup-era assumptions. If they hold custody over public funds, they will be expected to act like financial intermediaries, with the fiduciary responsibilities to match.

The second phase, coming into effect on June 19, 2025, turns from institutional reform to consumer protection. Retail customers will be required to pass a formal risk awareness assessment before being allowed to trade digital assets. This test will gauge user comprehension of crypto volatility, potential losses, and the speculative nature of tokens. Crucially, it is retroactive—existing users who fail or refuse the assessment may lose access. While many platforms already provide educational disclaimers, MAS’s approach elevates consumer literacy from a courtesy to a legal obligation.

To reinforce this gatekeeping, MAS is imposing an outright ban on practices that previously fueled irresponsible trading. Firms can no longer offer sign-up bonuses, referral incentives, or yield-based promotions. Credit and leverage products are forbidden, and locally issued credit cards may not be used for crypto purchases. These prohibitions apply to all retail investors, regardless of income, age, or experience, underscoring the view that structural rules—not user discretion—must underpin market safety. The approach stems from hard lessons: even sophisticated investors were burned in prior market crashes by overleveraging and chasing returns on platforms that offered little transparency or solvency protection.

Together, these two phases represent more than regulatory tightening. They aim to reset the terms of public trust. By emphasizing operational transparency and financial literacy, Singapore is declaring that legitimacy in crypto cannot be earned through innovation alone. It must be reinforced through governance, solvency, and a proven ability to prevent harm. MAS is not rejecting the crypto sector; it is rebuilding its foundations. And in doing so, it is betting that structure—not speed—will define the industry’s future.

Competing Models: Singapore, Hong Kong, and the Race to Define Regulation

As Singapore tightens its regulatory framework for digital assets, it finds itself navigating a quiet but consequential rivalry with Hong Kong. Both cities aspire to be Asia’s premier crypto hub, yet their visions for how to get there could hardly be more distinct. Where Singapore has opted for caution and control, Hong Kong has moved assertively to attract the very types of investors and platforms Singapore is now restricting. The contrast is not merely tactical. It reflects two competing philosophies about the nature of risk, the role of government in financial innovation, and what kind of regulatory regime best supports a sustainable crypto ecosystem.

In late 2024, Hong Kong reopened retail crypto trading under a new licensing regime. By early 2025, seven cryptocurrency exchanges had received formal approval to operate, part of a broader push to reestablish the city as a global digital asset trading center. The Securities and Futures Commission has emphasized access, growth, and speed, introducing rules that allow retail participation in a broader range of tokens and crypto products. This posture marks a strategic shift from the conservative stance it maintained in the years following China’s domestic exchange bans. With Beijing’s tacit blessing, Hong Kong is now positioned as a testbed for blockchain and digital finance activity that cannot be trialed within the mainland’s tightly controlled financial system.

Singapore, by contrast, is proceeding with a different calculus. While it had granted 29 digital payment token (DPT) licenses by the end of 2024 under the Payment Services Act, it had simultaneously introduced sweeping restrictions on how these firms operate. Leveraged trading, credit card purchases, sign-up incentives, and influencer promotions have all been banned. Retail investors must undergo risk assessments before gaining access to crypto platforms, and DPT providers are now required to safeguard customer assets in statutory trust accounts and maintain daily reconciliations. The overall message is clear: participation in this market should be deliberate, informed, and structurally insulated from contagion. Innovation is welcome, but only within carefully constructed boundaries.

This divergence creates a difficult strategic choice for crypto businesses looking to expand in Asia. On one hand, Singapore offers legal clarity, reputational stability, and robust financial infrastructure. It is attractive to institutional investors, global custodians, and payment platforms that prioritize long-term compliance over rapid scale. On the other hand, Hong Kong is offering a more flexible sandbox for retail-oriented platforms and speculative capital. For startups chasing user growth, token liquidity, or rapid token issuance, the incentives in Hong Kong are hard to ignore.

Beneath these regulatory choices lies a broader tension: the balance between market access and market integrity. Hong Kong is leaning toward access, betting that a wave of licensed activity will anchor its post-COVID economic revival and restore its status as a global finance hub. Singapore, in turn, is prioritizing integrity, positioning itself as a jurisdiction that protects investors first, even at the cost of slower market growth. Neither approach is inherently superior. Their success depends on context, including economic cycles, investor sentiment, enforcement outcomes, and whether future crises punish haste or reward agility.

Geopolitical alignment also shapes these regulatory paths. Hong Kong’s approach is calibrated with Chinese economic interests and strategic experimentation. Singapore, on the other hand, has emphasized neutrality, multilateralism, and alignment with Western standards on anti-money laundering, consumer protection, and financial transparency. This difference gives Singapore an edge in courting global finance players who require consistent regulatory treatment across jurisdictions. However, Hong Kong’s proximity to China and its expanding crypto policy leeway offer access to a massive potential user base and venture funding networks that are difficult to match elsewhere in the region.

In the long run, these competing models may begin to converge. Hong Kong may be forced to reimpose controls if retail losses mount or if confidence is shaken by another exchange collapse. Singapore, for its part, is unlikely to remain static. Its regulatory sandbox and newly finalized Stablecoin Regulatory Framework, which mandates capital adequacy, par redemption within five days, and MAS licensing for SCS issuers, signal an openness to experimentation under controlled conditions. The race is not only about attracting firms. It is also about defining what kind of financial center a country wants to be in the next decade of digital asset development.

If 2022 was the year crypto hit a credibility wall, 2025 is shaping up to be the year regulators assert their vision for how the industry can be salvaged. Singapore and Hong Kong are now writing two distinct blueprints for that future. What they share is an understanding that crypto is no longer a fringe asset class. What divides them is how much trust they are willing to place in the market to regulate itself.

Stablecoins and the New Architecture of Trust

Among the most revealing indicators of Singapore’s regulatory philosophy is its new framework for stablecoins. While much of the global regulatory discourse around digital assets still focuses on speculative tokens and market volatility, Singapore is attempting to carve out a separate category for digital instruments that serve a more foundational role in financial infrastructure. Stablecoins, particularly those pegged to fiat currencies, are now seen by the MAS as potential bridges between the traditional and decentralized economies. Their regulation is no longer a question of if, but how tightly and in what form.

In August 2023, MAS finalized its Single-Currency Stablecoin (SCS) framework, a first-of-its-kind model in the region that operates on an opt-in basis. Issuers of stablecoins pegged to the Singapore Dollar or a G10 currency can apply to be labeled “MAS-regulated stablecoins” if they meet strict requirements on reserve backing, redemption, disclosure, and governance. Stablecoins must be fully backed by low-risk, highly liquid assets, held with regulated custodians, and verified through monthly attestations. The framework also imposes a base capital threshold, limits on other financial activities by issuers, and a five-day redemption window for consumers to convert holdings back to fiat.

By elevating the regulatory standard for stablecoins, Singapore is signaling its intention to differentiate utility-driven digital assets from speculative ones. This is not just a matter of consumer protection, though that is a major factor. It is also a question of monetary sovereignty and systemic risk. As stablecoins become more embedded in payment systems, remittances, and decentralized applications, they begin to take on functions historically reserved for regulated banks and central payment networks. Without adequate safeguards, this shift could undermine public trust in the broader financial system. The MAS framework preempts that risk by building a regulatory perimeter around value stability and fiduciary responsibility.

This approach also reflects Singapore’s pragmatic view of how crypto assets should evolve. Rather than shutting the door on innovation, MAS is trying to channel it into structures that are intelligible, testable, and enforceable. Stablecoins, in this view, are not inherently dangerous. They are dangerous when unregulated, opaque, or misused as speculative tools. By drawing clear boundaries and offering a formal label that signifies compliance, Singapore is encouraging a market for stablecoins that prioritizes functionality over hype.

At the same time, the framework’s opt-in design reveals a cautious optimism. Not all stablecoins will choose to comply, and MAS has made clear that unregulated variants will still be treated under the broader Digital Payment Token (DPT) regime. This leaves room for innovation to occur outside the strictest perimeter, while providing a regulated path for firms that want legitimacy and institutional adoption. It is a balancing act: too much rigidity could stifle development, but too little oversight could replicate the very risks the framework seeks to eliminate.

Compared to Hong Kong, where a proposed stablecoin bill remains under review and where regulatory distinctions between different classes of digital tokens are less clearly articulated, Singapore’s stablecoin regime offers a roadmap grounded in legal precision and operational clarity. For payment firms, remittance services, or fintechs looking to integrate stablecoins into cross-border transactions, the assurance of MAS oversight may prove decisive. It offers a counterpoint to the speculative volatility of 2021 and 2022, replacing promise with infrastructure, and hype with trust.

Singapore’s bet on stablecoins is, in many ways, its most forward-looking policy move in digital finance to date. It suggests that the future of crypto in the city-state will be less about trading volume and more about technological utility. The goal is not to eliminate risk, but to manage it in a way that preserves confidence in both the innovation and the institutions that govern it.

Risk, Restraint, and the Strategic Logic Behind Singapore’s Regulatory Path

Behind Singapore’s evolving approach to crypto regulation lies a deliberate and highly disciplined strategy. This is not the story of a city-state racing to capture first-mover advantage or flood its markets with innovation. It is the story of a financial hub applying lessons from crisis, imposing restraint by design, and betting that credibility—not speed—will define leadership in digital finance.

The implosion of Terra/Luna and the collapse of firms like Three Arrows Capital, both of which had significant footprints in Singapore, catalyzed a rethinking of the nation’s regulatory posture. These events revealed not only the fragility of speculative crypto models but also the reputational damage that can follow when regulation lags behind innovation. The MAS responded with urgency, but not with panic. Rather than banning crypto outright or rushing to loosen market access in an attempt to stay competitive, MAS opted to build an infrastructure of trust, one safeguard at a time.

At the heart of this approach is a belief that regulation must do more than react. It must anticipate. The new rules that restrict retail access to volatile tokens, prohibit crypto purchases using credit cards, and enforce risk awareness assessments are not merely protective—they are signals. MAS is signaling to firms, investors, and foreign regulators alike that Singapore intends to host only those actors who understand the stakes and are prepared to operate within strict guardrails. This posture, far from being defensive, is a proactive move to align the country’s crypto landscape with the broader values of financial stability, transparency, and systemic soundness.

Some critics suggest that Singapore risks falling behind in the regional competition for crypto business, especially as Hong Kong accelerates licensing approvals and reopens retail trading. But Singapore is not playing the same game. Where others offer access, it offers assurance. Where others compete on leniency, it competes on reliability. This distinction is not cosmetic. In the long run, institutional investors, payment providers, and multinational platforms are more likely to anchor themselves in jurisdictions that protect not only their licenses, but also their reputations.

This emphasis on long-term trust is evident in the way MAS has integrated global norms into local practice. Singapore’s compliance with the Travel Rule, its alignment with Financial Action Task Force (FATF) standards, and its insistence on AML/CFT robustness reflect more than regulatory housekeeping. They are part of a broader project to ensure that Singapore remains interoperable with international markets. As other regions impose stricter capital controls or clamp down on unlicensed platforms, Singapore’s position as a clean, compliant, and cooperative hub becomes a competitive advantage in its own right.

Perhaps most importantly, Singapore’s cautious stance reflects a broader truth about the economics of reputation. In financial markets, reputation is not a branding exercise. It is the infrastructure upon which capital flows. Without it, liquidity dries up, partnerships fray, and markets falter. Singapore has spent decades building a reputation for stability and rule of law. It is now extending that reputation into the crypto space, not by chasing headlines, but by designing systems that are meant to endure both the hype cycles and the inevitable collapses that follow.

In this respect, Singapore’s crypto strategy is neither overly cautious nor overly aggressive. It is fundamentally architectural. Rather than treating regulation as a set of constraints, the city-state views it as a design challenge: how to build a market that can both attract innovation and survive disruption. This balance—between openness and oversight, risk and resilience—is what sets Singapore apart. It is not betting on being the fastest to regulate. It is betting on being the last jurisdiction standing when the dust settles.

Looking Ahead: Can Singapore Set the Regional Standard?

The test of Singapore’s regulatory model will not be its popularity with startups or its short-term impact on trading volumes. It will be whether its frameworks begin to shape how other jurisdictions think about crypto’s integration into mainstream finance. That influence will not emerge through policy declarations alone, but through the gravitational pull of infrastructure. As Singapore continues to lead regional pilots on cross-border settlement, digital asset custody, and tokenized payments, its rules are increasingly becoming the operational standards others must align with to participate.

Much of this influence will hinge on Singapore’s ability to embed regulatory expectations into technical architecture. Initiatives like Project Ubin+ are not just explorations of cross-border CBDC transactions—they are stress tests for how compliance, privacy, and monetary controls can be hardwired into digital rails. If these systems become regionally adopted, the protocols designed in Singapore will shape how transactions are validated, how counterparties are screened, and how financial flows are monitored in real time. This would give Singapore a level of behind-the-scenes regulatory influence that far exceeds its market size.

At the same time, Singapore is increasingly being viewed as a reference point in conversations around licensing regimes, stablecoin classifications, and custodial security standards. Its legal clarity appeals to countries seeking to draft crypto laws that balance innovation with solvency safeguards, particularly in emerging markets where regulatory capacity is still developing. Already, regional forums and bilateral working groups are turning to MAS documents and sandbox experiments as templates. Singapore’s edge lies not only in the sophistication of its rules, but in their tested enforceability across a functioning financial system.

However, setting a regional standard will also require navigating diplomatic and strategic boundaries. Singapore must continue walking a tightrope between attracting global fintech players and preserving autonomy from dominant powers. Its credibility as a neutral actor is an asset, but it will need to manage growing pressure from major economies that may seek to impose their own compliance frameworks on Asia. Whether Singapore can maintain its policy independence while exporting regulatory models remains an open question.

Singapore’s bet is clear: that financial trust, reinforced through clear rules and conservative safeguards, will outlast hype cycles and speculative waves. It is building a crypto regime not for the bull market, but for the eventual settlement layer of digital finance. As the region edges closer to digital currency adoption and regulatory harmonization, the question is no longer whether others will follow Singapore’s lead—but how fast, and at what cost to their own strategic autonomy.

Image credits: PICRYL.

James Wang
James is a researcher specializing in international relations and governance. Born in China and raised in Singapore, he is now based in Canada. James has worked with the G20 Research Group and the NATO Association of Canada, focusing on global governance, security policy, and multilateral diplomacy. James will start his Master of Science in Foreign Service at Georgetown University later this year.