Web3 projects face new regulatory challenges, structural reconstruction is imminent

Recently, the Monetary Authority of Singapore officially released the final regulatory provisions for "Digital Token Service Providers" (DTSP), which are planned to be fully implemented by June 30, 2025. This initiative is not only a new licensing requirement for token services but also a structural reconstruction of the operational logic of Web3 projects.

Unlike before, the new regulations significantly expand the scope of "token services" to include various activities that project parties may be involved in, such as issuance, promotion, trading, transfer, custody, OTC matching, and providing technical or operational assistance. Any involvement in any aspect of the Token mechanism may be considered as a service provider.

It is more noteworthy that the regulatory judgment criteria have shifted from the place of registration or on-chain deployment to "where the people are, where the business activities are." This means that even if the contract is deployed on-chain and the system operates in the cloud, as long as the team is based in Singapore and promotes token-related business, it may be recognized as "operating in Singapore." This change marks the official farewell to the regulatory vacuum period for the remote architecture model of "people in Singapore, business on the chain."

The Monetary Authority has clearly stated that it will adopt an "extremely cautious" attitude towards licensing DTSP, applicable only to a very small number of applicants. This is not just a licensing bid, but more like an active selection of project governance structures. Web3 project architectures that lack role segregation, have unclear funding paths, and have vague responsibility divisions will find it difficult to survive in this round of cleansing.

In the face of this situation, many projects first consider relocating to Hong Kong. However, while Hong Kong's regulatory system is somewhat different, it is equally strict. It places greater emphasis on "proactive structural design," requiring projects to provide compliant solutions in key areas such as user access, currency selection, and custody mechanisms, and to establish independent auditing, anti-money laundering, and risk control systems.

In fact, the regulation in Hong Kong is more inclined to accept project types that have a clear structure, sufficient information disclosure, and can be transparently identified under the existing licensing system. This is more like a "partially open approach under financial compliance" rather than a general acceptance of all innovative forms.

As for other alternatives such as Dubai, Portugal, Seychelles, etc., they either lack a mature financial regulatory framework or have unclear and unsustainable compliance paths. They may provide short-term shelter, but it is difficult to establish a long-term legitimacy foundation.

Current regulatory trends show that jurisdictions no longer accept a "registered address patchwork" Web3 structure, but instead begin to define accountability based on "where people are, where events occur." Therefore, the more urgent issue for project teams is not "where to move," but how to construct a framework that can "exist in compliance."

The signals released by the new DTSP regulations in Singapore are not aimed at specific projects or regions, but rather represent a systematic update of regulatory logic. The regulatory focus has shifted from the location of company registration and code deployment to more substantive issues: Who controls the Token issuance decisions? Is the user asset custody path clear? Where are the actual controllers of the project? Is there a mechanism for transparent governance, structural segregation, and clearly defined responsibilities?

This transformation tests the overall "structural capability" of Web3 projects, specifically whether they can establish a system of roles and a framework of responsibilities that can be transparent, accountable, and sustainably operated. In this context, a simple "relocation of registration" is no longer an effective solution, but rather resembles a game of risk transfer.

For investors, this regulatory evolution signifies an upgrade in the dimensions of judgment. In addition to focusing on traditional factors such as white papers and roadmaps, the "structural transparency" of the project will become a mandatory review item. Investors need to consider: Does the Token have a legitimate issuance path? Is the control structure clear? Have the founders faced excessive legal risks? Does the project have compliant financing, token issuance, and even exit mechanisms?

Overall, regulation is driving the Web3 market into a new stage of "identity governance." Project teams can no longer rely solely on "narratives" but need to demonstrate their capability in structural design; investors are also no longer just looking at valuations but need to understand the project's level of compliance preparation in depth. The new DTSP regulations are just the beginning, as a broader wave of compliance is unfolding globally.