‍1. Introduction

Singapore, as a key global international financial hub, has long attracted worldwide capital and innovative forces with its open market environment, solid legal system, and efficient regulatory structure. In recent years, with the rapid growth of digital assets and blockchain technology, this city-state has gradually become a major center for crypto assets in the Asia-Pacific region. Not only does it gather a bunch of startups and international trading platforms, but it also draws in institutional investors, tech developers, and policymakers to explore the future of digital finance here. Driven by diverse market needs and supportive policies, Singapore's crypto ecosystem is steadily maturing.

According to the Independent Reserve Cryptocurrency Index (IRCI) Singapore 2025 report, awareness of cryptocurrencies in Singapore has hit an all-time high, with 94% of respondents knowing at least one crypto asset, 29% having owned crypto assets, among which 68% of crypto investors hold Bitcoin, 46% have held or are holding stablecoins, and the usage rate for stablecoins in actual payments and cross-border transfers has reached 53%. Plus, 57% of crypto asset holders believe the crypto industry will go mainstream in the future, and 58% of the public calls for clearer government regulations... These stats paint a picture of a market with broad awareness, diverse applications, and clear expectations for regulation.

In this context, understanding Singapore's cryptocurrency tax system and regulatory framework isn't just about legal compliance—it's key to spotting market potential and risk patterns. This study will focus on the basic tax system and regulatory framework, showing how institutions and the market interact in Singapore's crypto scene, to give investors a clear view of the current state of Singapore's crypto industry, hoping to provide solid grounds for business decisions.

2. Regulatory Framework

Crypto often gets linked with words like "risk." Unlike many jurisdictions, such as the U.S. where states have their own unique crypto rules, Singapore's crypto regulatory system stands out for its clarity and balance. Though getting the right qualifications and licenses in Singapore isn't easy for many Web3 companies, that's exactly why local Web3 businesses have their risks well under control.

In Singapore, the taxation and financial regulation of crypto assets are handled separately by the Inland Revenue Authority of Singapore (IRAS) and the Monetary Authority of Singapore (MAS).

The tax collection for cryptocurrencies is mainly managed by IRAS. As the national tax authority, IRAS sets and implements policies on income tax and Goods and Services Tax (GST) involving crypto assets, covering tax obligations for businesses and individuals in activities like holding, trading, paying, and issuing. IRAS has released several specific e-Tax Guides, one on income tax treatment for digital tokens and another on GST treatment for digital payment tokens, clearly outlining tax classifications, taxable events, and calculation principles for different types of tokens (payment, utility, security). At the same time, IRAS is leading the implementation of the Crypto-Asset Reporting Framework (CARF) in the country, playing a core role in cross-border tax information exchange.

MAS mainly handles the financial regulation of cryptocurrencies. Not only does it act as the central bank, but as a comprehensive regulator for the financial industry and payment services, it has a big impact on licensing, compliance, and risk control for crypto-related businesses. For example, MAS's licensing requirements for Digital Payment Token Service Providers (DPTSP) and its regulatory framework for stablecoins indirectly affect how related businesses handle taxes and compliance paths.

3. Basic Research on Singapore’s Crypto Tax System

Singapore's tax system is known for being simple in structure and focused on key tax bases. Its standout feature is no capital gains tax worldwide, and it has scrapped estate and gift taxes. That means in Singapore, the appreciation of asset values usually doesn't trigger a separate tax event—the tax depends on the nature and frequency of the transaction. Plus, with relatively low income tax rates, its tax system keeps fiscal revenue stable while being quite welcoming to capital flows and innovative activities.

Under this framework, Singapore's taxation on crypto assets is relatively focused, mainly on income tax and Goods and Services Tax as the core taxes. The former targets gains from frequent or business-like crypto trades, while the latter regulates indirect tax treatment for digital payment tokens in goods and services transactions. Other taxes like withholding tax or employment income tax only kick in under specific transaction structures or payment scenarios.

3.1 Income Tax

Singapore's income tax system uses a territorial source principle, meaning it only taxes income sourced from Singapore or remitted into Singapore from overseas. Personal income tax has progressive rates, with resident rates from 0% to 22% (up to 24% starting from the 2024 year of assessment), while non-residents are usually taxed at a flat 15% or the resident rate, whichever is higher. Corporate income tax is a flat 17%, with exemptions for startups and specific industry reliefs.

On April 17, 2020, IRAS released the Income Tax Treatment of Digital Tokens, aimed at providing guidance on income tax treatment for transactions involving digital tokens.

The guide classifies digital tokens into three categories: payment tokens, utility tokens, and security tokens.

The guide covers the following five types of transactions:

i. Receiving digital tokens as payment for goods and services;

ii. Receiving digital tokens as employment remuneration;

iii. Using digital tokens as payment for goods and services;

iv. Buying and selling digital tokens; or

v. Issuing digital tokens through an Initial Coin Offering (ICO).

3.1.1. Tax Treatment for Payment Tokens

Synonymous with cryptocurrencies, they have no functions other than payment.

Although payment tokens are a payment method, since they're not issued by the government, they don't qualify as legal tender. For tax purposes, IRAS treats payment tokens as intangible property, which usually represents a set of rights and obligations. Transactions using payment tokens for goods or services are seen as barter trades, and the value of the transferred goods or services should be determined at the time of the transaction.

Income Method

Explanation

Tax Treatment

A. Receiving payment tokens as business payment for goods or services

A business receives payment tokens in exchange for providing goods or services

This transaction is treated as a barter trade. The recipient of the payment tokens will be taxed based on the value of the underlying goods provided or services rendered.

The tax arises from the business arrangement, and IRAS generally respects the form of the transaction (unless the form doesn't match the substance). In this regard, the contract terms and transaction value should reflect the open market value of the goods or services. The contract arrangements need to be reviewed to determine the amount of taxable income from receiving the payment tokens.

For example, assuming both contracts reflect the open market value of the services performed:

A) Contract agrees to receive a certain value in fiat currency, paid via payment tokens, e.g., Bitcoin worth $100.

In this case, taxable income is $100.

B) Contract agrees to receive a certain number of payment tokens, e.g., one Bitcoin unit.

In this case, taxable income is the value of the payment token unit when the income is accrued to the business.

B. Receiving payment tokens as payment for personal employment services

Employees receive payment tokens as remuneration, like Bitcoin.                                                                                                                                                                                                                                                                                              

Salaries paid in the form of payment tokens should be included in taxable income based on the value of the employment services provided by the employee, when the income is accrued to the employee. Similar to scenario (A) above, the employment contract needs to be reviewed to determine the taxable amount.

If the payment tokens given to the employee have a vesting period, that portion will be included in taxable income when the vesting period is lifted. This is based on the principle that the income only accrues to the employee when the vesting ends.

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C. Purchasing payment tokens

Purchasing payment tokens itself is not a taxable event. However, the intent at the time of purchase (judged by applying the "badges of trade" principle) will be considered to determine if subsequent disposal of the tokens constitutes trading activity, thus whether the gains/losses from disposal are revenue in nature.

D. Obtaining payment tokens through mining

Miners can mine payment tokens for their own use or sale. When a miner successfully mines, the system rewards them with payment tokens, which they can then use to exchange for goods or services, or dispose of.

Whether profits from disposing of payment tokens (including those from mining pools) are taxable depends on whether the mining activity is for profit. If the miner mines just for hobby or holds the mined tokens as long-term investments, capital gains/losses from disposing payment tokens are not taxable/deductible. Conversely, if the miner is deemed to be trading, gains/losses from disposing payment tokens are taxable/deductible.
Similarly, if the miner charges fees for providing mining services, those fees should be included in taxable income based on the amount received (see scenario E below).

The miner's profits (if any) will be taxed upon disposal of the payment tokens, not when successfully mining them. This is because, although the miner gains rights to the payment tokens upon successful mining, merely holding them doesn't generate income.

Company tax treatment: Since companies are usually set up for profit, a company engaging in mining will be seen as conducting a mining business and subject to general tax rules. The company can deduct mining expenses on an "incurred basis" from the start of business until it establishes a profit structure and begins its first commercial activity. Signs that mining business has started include:

1) Purchasing mining equipment;

2) Selling the mined digital tokens.

The company should pay tax on profits from sales when disposing of the mined payment tokens.

Personal tax treatment: By default, individuals engaging in mining are seen as doing it as a hobby. Gains from selling mined payment tokens are treated as capital gains, not taxable; mining-related expenses are not deductible.

But if the individual consistently and systematically seeks profits from this activity, they may be deemed to be operating as a miner professionally, and gains from selling mined tokens will be taxable.

E. Receiving payment tokens by providing mining services

Miners can mine payment tokens on behalf of clients, and clients pay fees for the miner's mining services. The miner doesn't keep the mined tokens, as they belong to the client.

Fees obtained by the mining service provider for providing mining services are taxable income.

F. Receiving payment tokens through airdrops

Airdrops refer to distributing tokens for free (i.e., gratis), usually as a marketing tactic to boost awareness of new tokens, especially among "influencer" groups, and to increase liquidity in the early stages of new token projects.

If payment tokens are not obtained in exchange for providing any goods or services, they should not be considered income for the recipient, thus not taxable. On the other hand, if the airdrop is in return for services already provided or expected to be provided, it may be treated as taxable income.

G. Receiving payment tokens through hard forks

A hard fork refers to splitting an existing payment token to create a second payment token that operates separately from the original but exists alongside it. The purpose of a hard fork is usually technical, such as fixing major security risks in the old version, adding new features, or reversing certain transactions. Holders of existing payment tokens may end up receiving the second payment token for free.

If the recipient gets extra tokens without any quid pro quo, this can be seen as a windfall. Since it doesn't constitute income, it's not taxable upon receipt. But if the recipient engages in payment token trading, subsequent disposal of these tokens (including those from hard forks or airdrops) will require tax on the gains.

Table 1: Classification and Tax Treatment of Payment Tokens under Income Tax

Disposal Method

Tax Treatment

A. Used for exchanging goods/services

When the exchange happens, there are two implications:

Implication 1: Determining the tax-deductible expense amount. The purchased goods or received services can be deducted based on their base value, following the general deduction rules in Sections 14 and 15 of the Income Tax Act.

The contract needs to be reviewed to determine the expense amount.

Assuming the contracts reflect the open market value of the services:

A) If the contract obligation is to pay an agreed fiat currency amount, paid with equivalent payment tokens (e.g., $100 SGD in Bitcoin), it can be deducted at the agreed amount (e.g., $100 SGD).

B) If the contract obligation is to pay an agreed number of payment tokens (e.g., 1 Bitcoin), it can be deducted at the market value of the tokens when providing the goods/services.

Implication 2: Determining if gains/losses from disposing payment tokens are taxable/deductible. If the disposal is assessed as business in nature, gains/losses are taxable/deductible, judged by the "badges of trade" principle. Taxation timing is when the income is realized and accrues to the disposer.

B. Used for exchanging fiat currency

Whether gains/losses from disposing payment tokens for fiat currency are taxable depends on whether the payment token is a capital asset or revenue asset. This determines the nature of the gains/losses (capital or revenue).

C. Used for exchanging other types of payment tokens

The principle is the same as above; whether gains/losses from disposing payment tokens for another type of payment token are taxable depends on whether the payment token is a capital asset or revenue asset, and thus judges the nature of the conversion gains/losses (capital or revenue).

Table 2: Tax Treatment under Different Disposal Methods

3.1.2. Tax Treatment for Utility Tokens

Utility tokens give the token holder explicit or implicit rights to use or benefit from specific goods or services, and the tokens can be used to exchange for these goods or services.

They come in various forms, like vouchers (giving the holder rights to future services from the ICO company), or keys (giving the holder access rights to the ICO company's platform). When someone (hereinafter "user") obtains a utility token to redeem for goods or services in the future, the expenditure for purchasing the utility token is treated as a prepayment. Under tax deduction rules, when the token is used to redeem goods or services, deduction can be claimed based on the incurred expenditure amount.

The tax treatment for issuing utility tokens during an ICO will be explained in the fourth part on ICO tax treatment.

3.1.3. Tax Treatment for Security Tokens

Security tokens give the token holder partial ownership or rights to an underlying asset, usually with explicit or implicit control rights or economic interests. The more common types of issued security tokens are accounted for as debt or equity. However, since security tokens are essentially tokenized forms of traditional securities, they may take other forms of securities or investment assets/tools, such as units in a Collective Investment Scheme. The nature of security tokens depends on the associated rights and obligations, which further determine the nature of the income the holder receives from them, which could be interest, dividends, or other distributions, and the holder needs to pay tax accordingly.

When the holder disposes of security tokens, the tax treatment of disposal gains/losses depends on whether the security token is a capital asset or revenue asset for the holder. Accordingly, the gains/losses will be treated as capital or revenue in nature.

Security tokens are treated with relatively lenient policies like other securities in Singapore, with no tax on security tokens that are capital assets. Depending on the issuer of the security tokens, dividends and other revenue asset category income are taxed.

3.1.4. Tax Treatment for ICOs

ICO stands for Initial Coin Offering, involving issuing a new token, usually in exchange for other payment tokens, or in some cases, fiat currency. ICOs are often used by token issuers to raise funds or provide means to access existing or future specific goods or services.

The taxability of ICO proceeds in the hands of the token issuer depends on the rights and functions attached to the tokens issued to investors:

l Proceeds from issuing payment tokens, whether taxable depends on specific facts and circumstances;

l Proceeds from issuing utility tokens are usually treated as deferred income;

l Proceeds from issuing security tokens are similar to proceeds from issuing securities or other investment assets/tools, which are capital in nature and thus not taxable.

For security tokens that pay interest, dividends, or other distributions, the deductibility for the issuer should follow Sections 14 and 15 of the Income Tax Act.

See Table 3 for details.

Additionally, there may be the following special scenarios:

ICO failure: If a company issues utility tokens through ICO and uses the raised funds to develop a platform or services but ultimately fails to deliver, the tax treatment will depend on where the funds go: If the raised funds are refunded to investors, the company doesn't need to pay tax on the refunded amount; If the funds are not refunded, it needs to judge based on the ICO's nature whether it's a capital or revenue transaction, and the tax authority will consider factors like the company's main business, reasons for issuing tokens, and contractual obligations.

Pre-operational expenses: Reasonable business expenses incurred by a company for ICO before formal operations can be claimed under existing pre-operational expense deduction rules. Under Section 14U of the Income Tax Act, qualifying expenses can be deducted in the pre-commencement base period, and unused losses can be carried forward to future years or used via Group Relief. This provision helps ease the tax burden for businesses in the startup phase.

Founder tokens: ICO companies can reserve some tokens to grant to founding developers to recognize their contributions in token design and implementation. Such "founder tokens" if issued as remuneration for services are taxable income and taxed when the founder actually gains control; if there's a lock-up or restriction period, taxed at the value when it expires; if not obtained for providing services, not treated as taxable income.

Tip: The Inland Revenue Authority of Singapore (IRAS) clearly requires taxpayers to properly keep complete records related to digital tokens and provide them when necessary. These records should include transaction dates, quantity of tokens received or sold, token value and exchange rate at transaction time, transaction purpose, client or supplier information (for buy/sell trades), ICO details, and receipts or invoices for business expenses. These materials are not only the basis for tax declarations but also key vouchers for tax audits and ensuring compliance.

Taxability of Income

Generally, the ICO company is seen as engaging in payment token trading business, with tokens as trading inventory, so proceeds from issuing payment tokens are taxable income. However, since issuing payment tokens via ICO is uncommon, tax treatment may need to be judged based on specific facts.

Issuing utility tokens means the issuer has an obligation to provide some service in the future. Thus, the issuance proceeds are seen as consideration for future payments, which is taxable income in nature. Usually, ICO companies need to complete the development of the service platform to fulfill obligations. Therefore, such issuance proceeds are typically treated as deferred income.

Issuing security tokens gives investors specific contractual rights and economic interests, similar to rights of shareholders, bondholders, or other securities/investment asset holders. Thus, proceeds from issuing security tokens are similar to issuing securities or other investment assets, capital in nature, not taxable.

Taxation Timing

Taxed at issuance. As long as there are buyers and sellers and the issued tokens can be traded, tax is due at issuance.

Taxed when obligations are fulfilled (e.g., when services or goods are delivered).

The ICO company doesn't need to tax the proceeds at issuance. But dividends, interest, or other distributions paid to investors/token holders will follow general income tax rules/withholding tax rules (if paid to non-residents).

Income Source

ICO income source may be hard to determine because transactions can be fully online, with related activities in different countries. Judging if income is sourced from Singapore needs to consider factors like:

• Whether the company has a physical presence in Singapore;

• Where ICO marketing and promotion activities are conducted;

• Whether ICO participants are mainly in or outside Singapore;

• Whether blockchain tech developers are in or outside Singapore, etc.

Generally follows general income source rules. For example:

• For interest income, refer to where the loan occurs;

• For dividend income, refer to the tax residency of the dividend-paying company.

But if relevant info can't be directly obtained, need to judge based on specific facts.

Same as the utility token column, follows the same general income source rules and specific fact judgments.

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Table 3: Tax Situations for ICOs of Different Token Types

3.2 Goods and Services Tax (GST)

Goods and Services Tax (GST) is the main indirect tax form implemented in Singapore since 1994, broadly a consumption tax because it's levied on final consumption, but essentially still a value-added tax (VAT), levied at a uniform rate on most supplies of goods and services and imported goods. As of 2024, the standard GST rate is 9%. GST is collected and paid by businesses, applicable to domestic transactions and cross-border digital services, with some financial services, exports, and specific international services enjoying exemptions or zero rates.

On August 3, 2022, IRAS released the updated GST: Digital Payment Tokens (originally issued on November 19, 2019), setting rules for GST treatment of digital tokens and cryptocurrencies (hereinafter digital payment tokens).

The core change is that from January 1, 2020, supplies of qualifying digital payment tokens (DPT) are GST-exempt to avoid double taxation in token purchase and use stages. This adjustment significantly lowers tax friction for cryptocurrencies in payments and trades, boosting Singapore's competitiveness as a crypto-friendly jurisdiction. But note, this exemption only applies to cases meeting the DPT definition, and doesn't affect normal taxation on related intermediary service fees, platform fees, etc.

In specific rules, IRAS first strictly defines DPT and clearly excludes token types not in the exemption scope (like utility tokens, security tokens, closed-loop virtual currencies, etc.). Then, the guide distinguishes GST treatment for different token types in business stages like trading, exchanging, paying. For example, buying, selling, exchanging, and paying with compliant DPTs can enjoy exemptions, but services like platform operations, wallet custody, payment intermediation are still taxable supplies. Through this "asset attribute + business type" dual judgment, Singapore maintains tax fairness while minimizing tax barriers for crypto trades.

3.2.1. Defining Digital Payment Tokens

The guide states that a digital payment token (DPT) is a digital representation of value with all the following features:

a. Expressed as a unit;

b. Designed to be fungible (homogeneous);

c. Not denominated in any currency, and not pegged by the issuer to any currency;

d. Can be transferred, stored, or traded electronically;

e. Is, or is intended to be, accepted by the public or a section of the public as a medium of exchange, with no significant restrictions when used as consideration.

But digital payment tokens do not include the following:

f. Fiat currency;

g. If a supply is treated as exempt under Part I of the First Schedule to the Goods and Services Tax Act, and the reason isn't that the supply itself is a digital payment token with features (a) to (e) above, then that supply isn't a digital payment token;

h. Any matter that gives rights to receive or direct specific individuals or groups to provide goods or services, and after using that right, it no longer functions as a medium of exchange.

IRAS lists typical DPTs, including Bitcoin, Ether, Litecoin, Dash, Monero, Ripple, and Zcash, all with features like homogeneity, no peg to fiat, electronic transfer, and acceptance as a public medium of exchange. Plus, tokens like IdealCoin that can be used for payments in specific smart contract frameworks and freely outside, and StoreX that can continue as payment means even after exercising some specific rights, also meet the DPT definition.

In contrast, non-DPT cases include: Stablecoins, as their value is pegged to fiat and don't meet homogeneity and non-pegging requirements; virtual collectibles like CryptoKitties, which aren't fully fungible; game points or virtual currencies limited to specific environments; and points or loyalty points issued by retailers or platforms that can only redeem specific goods or services—these can't serve as broad mediums of exchange for the public.

Some cases may seem similar to DPTs but are excluded under certain conditions. For example, StoreY tokens initially designed as the sole payment for distributed file storage services, but after users exercise that specific right, the token loses its medium of exchange function, so it no longer meets the DPT definition.

For more detailed rules, features, and case explanations, refer to Section 5 of the guide (especially paragraphs 5.2–5.13 and examples).

3.2.2. General Trading Rules for Digital Payment Tokens

When DPT is used as a means to pay for goods or services (but not including exchange for fiat or other DPT), the payment act itself isn't seen as a supply, so no GST is levied. The payer doesn't pay GST when using DPT, but if the recipient is GST-registered, they should calculate output tax on the goods or services provided, unless the supply is exempt, zero-rated, or out of scope. For example, GST-registered company A buys software with Bitcoin; A doesn't pay GST for transferring Bitcoin, but seller company B, if GST-registered, needs to calculate GST for the software supply.

Second, exchanges between DPT and fiat, and between one DPT and another, are exempt supplies, no GST needed. But businesses still need to list related transactions as exempt supplies in declarations and report net realized gains or losses. For example, company C exchanges Bitcoin for Ether; neither pays GST, just handle it as exempt supplies in reports.

Plus, if a GST-registered company issues DPT via Initial Coin Offering (ICO) and exchanges for fiat, the issuance proceeds are also exempt supplies, to be reported as exempt income in GST returns. For example, company E issues DPT and sells to the public for SGD, the SGD proceeds are declared as exempt supply income.

Finally, DPT loans, advances, or credit arrangements are also exempt supplies, with related interest income not subject to GST, but must be reported as exempt income in declarations. For example, company F lends DPT and charges interest; the interest is listed as exempt supply in GST declarations.

Table 4 explains specific rules for determining supply amount, supply time, and customer location in transactions involving digital payment tokens.

Determination Item

Specific Explanation

Supply Amount    

When supplying taxable goods or services with digital payment tokens as consideration, the supply amount is determined by the Open Market Value (OMV) of the goods or services; if OMV can't be directly obtained, use market price of similar transactions or fair valuation. For exchanges of DPT with fiat or other DPT, use actual received amount or realized gains, no prior IRAS approval needed, but accounting and GST treatments must be consistent. If involving foreign currency quoted DPT, convert to SGD using acceptable exchange rates at transaction time (like IRAS published rates or credible exchange quotes).

Supply Time    

Supply time follows general GST rules, taking the earlier of invoice date or receipt date as supply time. For settlements with digital payment tokens, supply time can be seen as the date the transaction is confirmed on the blockchain. For installment or partial payments, calculate supply time separately based on each period's receipt or invoice date.

Customer Location  

Customer location determination affects zero-rate or exemption applicability. For business customers, if they have a business or fixed establishment in Singapore, registered in Singapore, or services mainly used in Singapore, they're considered Singapore customers; if establishments both in and out, judge by actual use location. For individual customers, based on usual residence, like long-term study, work, or living in Singapore with continuous stay. If customer location can't be directly confirmed, use proxy indicators (like payment method, billing address, IP address, etc.), need to keep at least two non-conflicting evidences; if still can't confirm, assume customer is in Singapore.

Table 4: Determination of Each Accounting Item

3.2.3. Rules for Specific Business Scenarios

(1) Mining

In general mining processes, miners provide computing power or validation services to the blockchain network, but have no direct relationship with the served transaction parties, and the party issuing block rewards/miner fees can't be identified. Thus, obtaining digital payment tokens from mining (like block rewards) itself doesn't constitute a "supply" in GST terms, no need to levy GST on the acquisition.

But if miners provide paid services to identifiable counterparties (e.g., charging commissions, transaction fees, hashing power rental fees per agreement), it's a taxable service supply. If the miner is GST-registered, tax at standard rate and declare; only zero-rate if meeting zero-rate conditions. If unable to reasonably determine the counterparty's location, handle at standard rate.

For subsequent disposal of mined tokens: From January 1, 2020, miners selling or transferring mined digital payment tokens to customers in Singapore is an exempt supply; if miners use mined tokens to buy goods or services, it's not seen as "supplying tokens" so no tax on the token part (goods/services supplier still taxes per their rules).

(2) Intermediaries

Services related to digital payment tokens provided by intermediaries, even involving token trades, are still taxable supplies. If the intermediary is GST-registered, whether to report token sales in GST declarations depends on whether they act as "principal" or "agent" in the transaction. If selling as principal, report the sale as their own supply and declare GST; if selling as agent for clients, don't include the sales as their supply, but only include fees or spreads from the transaction as supply and declare GST (unless the supply can apply zero-rate). When judging their role, intermediaries should self-assess based on contract responsibilities and risk bearing, payment obligations, pricing power, and token ownership indicators.

(3) Input Tax Credit and Reverse Charge Handling Rules

In business operations, input tax credit can only be claimed for expenses used in taxable supplies; if used for exempt supplies (like exchanging digital payment tokens for fiat or other tokens), no credit. If expenses involve both taxable and exempt supplies, or overall operations, apportion proportionally. For businesses doing both taxable and exempt supplies (e.g., some involving digital payment token exchanges), apportion and attribute input tax like other partially exempt businesses, unless meeting the De Minimis Rule and qualifying conditions to treat digital payment token supplies as incidental exempt supplies. Finally, as partially exempt businesses, if obtaining services or low-value goods from overseas suppliers, may still need to bear reverse charge obligations, and should refer to relevant IRAS guides.

3.2.4. Common Questions

Question

Answer

Q1

If some of my tokens are burned, does it still meet the digital payment token definition?

If the tokens meet all features of digital payment tokens, even if some are burned (i.e., permanently removed from circulation), it still meets the digital payment token definition.

Q2

Does the definition of "currency" include electronic money? If my token is pegged to fiat, is it "electronic money"?

For GST purposes, "currency" includes physical and electronic forms of fiat. Tokens pegged to fiat aren't electronic money but derivatives, exempt under paragraph 1(j) of Part I of the Fourth Schedule to the GST Act.

Q3

Does issuing new digital payment tokens via hard fork have GST implications?

If consideration is received when issuing new tokens, it's an exempt supply; if issued for free, not seen as a supply.

Q4

What's the GST treatment for digital payment token airdrops?                                                                        

Airdrops are free distributions of tokens, usually to boost new token awareness or add liquidity in early project stages. Airdrops don't constitute a GST supply.

Q5

Under what conditions is someone trading digital payment tokens seen as a trader?

Businesses mainly in exempt supplies under Regulation 34 of the GST (General) Regulations can't use their Regulation 33 exempt supplies for input tax credit on taxable supplies. If the core business involves exchanging DPT for fiat or other DPT, or providing any loans, advances, or credits, they're seen as DPT traders.

Q6

When lending digital payment tokens and returning at the end of the loan period, do I need to report the token value and interest income in GST declarations?

If the token transfer is part of a loan arrangement, report the loan interest as an exempt supply. Also, any realized gains/losses from price fluctuations should be reported as exempt supplies.

Q7

Can I use accounting recorded gains/losses (including unrealized) for GST declarations?

If not distinguishing realized or unrealized gains/losses, as administrative convenience, report the total gains/losses (realized or unrealized) as the value of exempt supplies.

Q8

Can gains/losses from different DPT trades be offset in GST declarations?

Yes, aggregate all DPT trade gains/losses in each accounting period and report the absolute value.

Q9

Can ICO issuing DPT be reported based on raised income, and subsequent trades based on actual gains/losses?

Yes, ICO can be reported based on raised income, and subsequent DPT exchanges with fiat or other DPT can choose to report based on actual gains/losses, but maintain consistency in the chosen method.

Table 5: Common Q&A

3.3 Classification by Usage Activities

Daily Activities

Tax Treatment

Income Tax Treatment

GST (Goods and Services Tax) Treatment

Receiving or paying income with crypto    

Included in taxable income based on market value at receipt; if business income, subject to income tax                        

If providing goods/services and the entity is GST-registered, GST on the goods/services (unless exempt or zero-rated)

Exchanging crypto for fiat      

If investment nature and not frequent trades, generally no income tax; if business nature, gains subject to income tax

Exempt supply, no GST                                                                              

Exchanging crypto for other crypto

Selling after long-term holding                  

Singapore has no capital gains tax, generally no income tax; business nature requires income tax

Not applicable                                                                                                      

Mining rewards                            

If commercial mining, included in taxable income based on market value at acquisition                                        

Depends on supply nature, may involve GST                                                                              

Staking rewards                            

Included in taxable income based on market value at acquisition                                                                      

Generally no GST                                                                                            

ICO issuing tokens                        

Issuance proceeds need to judge if subject to income tax (depending on business nature)                                                    

Exchanging for fiat is exempt supply                                                                    

Lending tokens and charging interest            

Interest income subject to income tax                                                                                    

Exempt supply                                                                                                

3.4 Other Taxes

Worldwide, most countries generally define cryptocurrencies as non-fiat currencies, so main taxes related to them usually include income tax, value-added tax, or consumption tax. In the previous sections on income tax and goods and services tax (GST), we've covered in detail the main tax treatment rules for cryptocurrencies in daily holding and usage activities in Singapore. In comparison, other taxes have lower relevance to daily crypto applications, so no further introduction.

 4 Basic Research on Singapore’s Crypto Regulation

4.1 Basic Framework

In recent years, Singapore has kept strengthening and improving standardized regulation for crypto assets, gradually forming a legal framework centered on the Payment Services Act 2019 (PSA) and the Financial Services and Markets Act 2022 (FSMA). The former establishes licensing management for digital payment token services (DPT services), anti-money laundering and counter-terrorism financing (AML/CFT) requirements, and operational compliance obligations; the latter supplements provisions on market integrity, cross-border cooperation, and enforcement powers in a broader financial services scope. The two laws connect, providing clear legal basis and compliance boundaries for issuing, trading, custody, payment, and related services of crypto assets.

Under this framework, the Monetary Authority of Singapore (MAS) has noticeably tightened license issuance and business conduct norms in recent years, backed by strict enforcement. With key licensing provisions of FSMA taking effect this year, MAS requires all entities set up in Singapore but only serving overseas clients to obtain licenses within deadlines, or face high fines and criminal liabilities; trading platform Tokenize Xchange announced exit from Singapore due to blocked license application, shifting business to Malaysia and Abu Dhabi; meanwhile, Binance chose to keep its local team to continue license application, while Bitget, Bybit, etc., consider moving some operations to more lenient regions.

4.2 Key Provisions

PSA is the first comprehensive law systematically including digital payment token (DPT) services, aimed at addressing payment and fund flow risks from fintech and crypto asset rise.

The law uses a "functional regulation" approach, meaning regardless of tech form, as long as involving fund flows and payment functions, it's regulated. In design, PSA classifies payment services, with a specific category for "digital payment token services," covering token-fiat exchanges, token-token exchanges, token custody, wallet services, and intermediation matching. This system directly requires all related institutions to apply for licenses before entering the Singapore market, common types being Standard Payment Institution licenses and Major Payment Institution licenses, the former for smaller-scale businesses, the latter with higher requirements on capital, risk control, and compliance. To prevent systemic risks, PSA also sets strict compliance and business regulation requirements, like Know Your Customer (KYC), AML/CFT procedures, customer fund safeguards and segregation, bans on misleading promotions and market manipulation, and regular submission of business and financial reports to MAS. In recent years, with tightening application thresholds, most international trading platforms (like Binance, Bybit, Crypto.com) face strict scrutiny in license applications, some even exiting Singapore, directly showing PSA's "high threshold, strong regulation" orientation.

FSMA mainly fills gaps in PSA on cross-border business, market integrity, and enforcement.

As Singapore becomes a regional crypto hub, many overseas providers offer DPT services to Singapore residents online, so FSMA expands regulatory reach. Its key provisions include: First, cross-border regulation, clarifying that even if businesses operate overseas, as long as targeting Singapore clients, they must comply with local laws, or face criminal or civil penalties; Second, market integrity, giving MAS greater powers to crack down on market manipulation, false statements, insider trading, to maintain market credibility; Third, AML/CFT, requiring domestic and overseas providers to meet international standards, strengthening cross-border disclosure and reporting; Fourth, enforcement powers, giving MAS direct powers for fines, prohibitions, business restrictions, or even criminal prosecutions. These provisions directly changed the industry landscape: On one hand, some unlicensed overseas exchanges forced to exit as they can't legally reach Singapore clients; on the other, licensed institutions bear higher capital and transparency requirements, like building sounder internal compliance and risk control frameworks. Notably, some key FSMA provisions were implemented in phases after release, all effective by June 30, 2025.

4.3 Specific Details

4.3.1 Licenses

Singapore implements strict licensing and permission management for Digital Payment Token Service Providers (DPTSP), mainly based on the Payment Services Act 2019 (PSA) and its amendments, and Part 9 of the Financial Services and Markets Act 2022 (FSMA).

DPT Licensing System under PSA

Under PSA, the sixth category "digital payment token services" is formally regulated, covering exchanges between digital payment tokens and fiat, between tokens, token custody, wallet services, intermediation matching, etc. Institutions providing these must apply for one of two license types:

l Standard Payment Institution License (SPI): For small to medium DPTSP. Application conditions include: Registered as a Singapore entity, with local premises and records available for regulatory queries, at least one management member as Singapore citizen, permanent resident, or employment pass holder; minimum registered capital SGD 100,000, and risk management capabilities matching business scale.

l Major Payment Institution License (MPI): For higher transaction volumes or multiple payment services. This license has higher requirements, usually including larger capital reserves, customer fund segregation, security safeguards, etc.

In 2023, MAS further strengthened application requirements: All applying for new licenses or changing licenses to add DPT services must submit a legal opinion from a professional law firm, clearly stating business model, whether related services are under PSA; also attach an independent external audit firm's compliance assessment report, covering business compliance and AML/CFT mechanisms.

DTSP Expanded Regulation under FSMA

Part 9 of FSMA introduces the Digital Token Service Provider (DTSP) licensing system, to fill PSA's gaps in cross-border business regulation. From June 30, 2025, any Singapore-registered company or with substantial operations in Singapore, providing digital token services to overseas clients, must apply for DTSP license.

MAS states that such DTSP models have high money laundering risks and are hard to regulate, so approvals are rare, effectively blocking gray areas for regulatory arbitrage. Even in rare approvals, must strictly meet standards including AML/CFT checks, cross-border info sharing, tech and business compliance.

Whether under PSA or FSMA, the systems aim for high-threshold licenses, strict compliance, preventing arbitrage, ensuring digital payment token services operate under high standards in Singapore. These measures help maintain financial stability and market integrity, clarifying entry boundaries for legitimate operators.

4.3.2 Stablecoins

Singapore pioneered a dedicated stablecoin regulatory framework, released by MAS in August 2023 as the Regulatory Framework for Stablecoins, effective October 2024 via amendments to the Payment Services Act (PSA) and supporting sub-laws. This framework mainly targets "qualified stablecoins" (Single-Currency Stablecoins, SCS), aiming to safeguard user funds, boost transparency, and build market confidence.

Per MAS rules, only stablecoins meeting these conditions are "qualified stablecoins" (MAS-regulated Stablecoins):

l Peg object: Must be fully pegged 1:1 to Singapore Dollar (SGD) or G10 currencies' fiat;

l Issuer: Limited to Singapore-registered and regulated issuers;

l Issuance scale: Circulation scale reaching/exceeding SGD 5 million to enter mandatory regulation;

l Payment attribute: Mainly used as payment tools, not speculative investment tokens.

To ensure redemption capability, regulation requires qualified stablecoins to have full high-quality reserve assets:

l 100% reserve backing: Issuance total must be fully backed by low-risk, high-liquidity assets (like cash, treasury bills);

l Custody requirements: Reserves stored in regulated financial institutions (banks or custodians), segregated from issuer's own funds;

l Regular audits: Issuers must publish monthly reserve reports, with annual audits by independent auditors, ensuring sufficiency and transparency.

Stablecoin issuers must fulfill information disclosure and risk management obligations:

l Whitepaper disclosure: Release detailed whitepaper on governance, reserve arrangements, liquidation and redemption rules;

l Risk prompts: Clearly inform users stablecoins aren't risk-free, with market liquidity and tech risks;

l Redemption obligation: Must promise 1:1 redemption in reasonable time (usually within 5 business days);

l Ban on mixed issuance: Same institution can't issue both regulated and unregulated stablecoins to avoid confusing investors.

MAS's goal in promoting stablecoin regulation is to create a "trusted stablecoin category." Qualified stablecoins will enjoy higher recognition in payment systems and financial applications, and MAS plans to allow interoperability with traditional electronic payment systems. In contrast, stablecoins not meeting conditions (e.g., pegged to non-G10 currencies) can't promote as MAS-regulated, and may face stricter ad and usage restrictions.

4.3.3 Compliance and Reporting

In Singapore, crypto asset service providers (DPTSP) not only need licenses but must follow strict compliance and reporting obligations. These come mainly from the Payment Services Act (PSA), Financial Services and Markets Act (FSMA), and MAS guides, focusing on KYC/AML processes, transaction record keeping, and suspicious transaction reporting.

DPT service providers must implement thorough customer due diligence (CDD) and ongoing monitoring:

l Identity verification (KYC): Before client onboarding or large transactions, verify identity, collect name, address, ID documents, etc. (PSA §23, FSMA §36);

l Risk tiering: Providers must apply differentiated due diligence based on client risk levels (high-risk like cross-border fund movers, politically exposed persons PEPs);

l Ongoing monitoring: Continuously monitor client transaction patterns; if anomalies found, enhance investigation and keep records.

All DPT-related transactions and client data must be fully recorded for future regulatory reviews or enforcement:

l Retention period: At least 5 years (PSA §47);

l Record scope: Including transaction date, amount, counterparty identity, payment instrument, fund source and purpose;

l Electronic archiving: Allowed via electronic systems, but must ensure data authenticity, integrity, and traceability.

Under Singapore's Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and Terrorism (Suppression of Financing) Act (TFA), all DPT service providers have suspicious transaction reporting obligations:

l Trigger conditions: If provider knows or suspects a transaction involves money laundering, terrorism financing, or other illegal activities, must submit suspicious transaction report to Singapore's Suspicious Transaction Reporting Office (STRO) within 15 business days;

l Criminal liability: Failure to report may lead to criminal responsibility for institutions and responsible persons (CDSA §39, TFA §8);

l International cooperation: MAS shares some STR data with overseas regulators for cross-border enforcement.

Through compliance and reporting, Singapore ensures DPT market transparency and traceability. KYC/AML prevents anonymous trades hiding illegal funds; record keeping provides evidence for audits and investigations; suspicious reporting offers early warnings against cross-border money laundering and terrorism financing. Together, they build a strict crypto asset compliance baseline in Singapore globally.

4.3.4 Investor Protection

In Singapore, financial regulators not only focus on financial stability and compliance but highly value investor protection for crypto assets. Core requirements are in ad promotion restrictions, risk prompt obligations, and bans on misleading statements. These mainly from Financial Services and Markets Act 2022 (FSMA), Payment Services Act 2019 (PSA), and MAS's specific guides (especially MAS 2022 Guidelines on Advertisements for Digital Payment Token Service Providers).

MAS clearly requires DPT service providers not to promote services to retail public via exaggerated gains or improper channels:

l Channel restrictions: Ban promotions in public places (like subways, bus stops, malls) or high-public-contact activities;

l Promotion mediums: No using gifts, lotteries, airdrops to attract public participation;

l Allowed channels: Only via own official websites, mobile apps, or official social media pages for info disclosure.

All DPT service providers must prominently display risk prompts on client interfaces, ensuring investors understand high-risk nature of digital assets:

l Prompt content: Must state "Cryptocurrencies are not suitable for all investors, their value may fluctuate sharply and may lead to total loss";

l Presentation: Prompts must be clear, visible, not hidden in long documents or small font terms;

l Special protection for retail investors: For first-time trading clients, providers must conduct suitability assessment to confirm risk tolerance.

DPT service providers must follow principles of true, complete, and non-misleading statements:

l Prohibited acts: No using "guaranteed returns," "zero risk," "principal protected" misleading terms;

l Info disclosure: For product terms, fees, custody arrangements, liquidation mechanisms, etc., provide complete, accurate, and easy-to-understand explanations;

l Violation consequences: If misleading statements, MAS can revoke licenses, impose high fines, severe cases even pursue criminal liability.

Singapore's investor protection mechanism core logic is curbing improper promotions + strengthening risk awareness + ensuring true disclosure. MAS emphasized in 2022 not allowing crypto assets promoted as "speculative get-rich-quick schemes," but guiding rational risk recognition. These measures make Singapore one of the earliest jurisdictions globally to strongly regulate crypto ads and risk prompts, effectively reducing retail investor losses from info asymmetry and market hype.

Overall, Singapore's regulatory approach always shows compliance-first logic. Regulators built clear legal frameworks with detailed execution standards, systematically including crypto asset businesses in existing financial governance. International media and industry generally think this setup effectively boosts market transparency, solidifying Singapore's reputation as a global financial hub for compliance. But at the same time, high-threshold compliance objectively pushes some businesses to migrate to more lenient jurisdictions like Hong Kong or Dubai. Thus, Singapore gradually forms a benchmark image of strict regulation in global crypto governance: Short-term may curb market expansion and innovation, but long-term helps shape a stable, safe, and sustainable market environment. In summary, this section has systematically summarized related laws and regulatory practices, with key threads clearly presented; for more detailed clause levels, please refer to PSA and FSMA originals.

5 Conclusion

Overall, Singapore has formed a fairly complete dual framework for crypto asset governance in taxation and regulation.

On taxation, the government consistently treats cryptocurrencies as non-fiat, so daily use mainly applies income tax and goods and services tax (GST) rules: Whether profiting from trades, paying for goods and services with tokens, or issuing and exchanging digital tokens, there are clear taxable and exempt boundaries. Since Singapore has no capital gains tax, sales purely from holding crypto appreciation usually aren't taxed, keeping its tax system relatively simple.

On regulation, Singapore sticks to compliance-priority, with Payment Services Act 2019 (PSA) and Financial Services and Markets Act 2022 (FSMA) as core legal systems, establishing licensing, stablecoin management, compliance and reporting, investor protection rules. The Monetary Authority of Singapore (MAS) ensures market operations under high transparency and thresholds with strict enforcement and ongoing guides. Though some businesses shift to more lenient jurisdictions like Hong Kong or Dubai due to costs and restrictions, Singapore wins global recognition as a high-standard regulation model, providing institutional safeguards for long-term sustainable market development.

Looking globally, Singapore's path highlights a combo of clear taxation and strict regulation: Compared to U.S. fragmented regulation, EU's ongoing Markets in Crypto-Assets (MiCA), and UK's lag on stablecoin regulation, Singapore has built a more complete framework. This high threshold may curb business expansion short-term, but long-term, through transparent and stable institutions, provides replicable experience for integrating crypto assets into traditional finance.