How to Structure a Crypto Business in Singapore: PSA vs FSM Act Explained

If you are planning to establish a crypto business in Singapore, one of the most important—and most misunderstood—decisions you will make is how to structure your operations from a regulatory perspective.

At first glance, the framework seems straightforward. You come across the Payment Services Act (PSA), you hear about the Financial Services and Markets Act (FSMA), and you assume that one of them applies to your business.

But in reality, it is not a question of choosing one over the other.

It is a question of understanding:

How both frameworks apply to your business—and how to structure your operations so that you are aligned with MAS expectations from the start.

This is where many crypto startups get it wrong. They approach structuring as a legal formality, when in fact it is a strategic decision that determines whether their business is licensable, scalable, and sustainable in Singapore.

This article explains how to think about structuring your crypto business under the PSA and FSMA, how MAS evaluates your setup, and how to avoid the most common mistakes that lead to delays or regulatory friction.

The First Principle: MAS Regulates Activities, Not Structures

Before diving into PSA and FSMA, you need to understand one core principle that underpins Singapore’s entire regulatory approach:

MAS regulates what you do—not how you structure it.

This means that:

• You cannot avoid regulation by using a different corporate structure
• You cannot rely on labels like “non-custodial” or “decentralised”
• You cannot separate functions artificially to fall outside the regulatory perimeter

MAS looks at:

• What services you provide
• How transactions occur
• Who controls or influences those transactions

Your structure must reflect this reality.

If it does not, MAS will look through it.

Understanding the Payment Services Act (PSA)

The PSA is the primary law governing crypto businesses in Singapore.

It regulates Digital Payment Token (DPT) services, which include:

• Buying or selling crypto
• Operating a trading platform
• Facilitating transactions
• Transferring digital assets
• Providing custody services

If your business performs any of these activities:

You will likely require a licence under the PSA.

What the PSA Is Designed to Do

The PSA focuses on:

• Regulating payment-related activities
• Managing financial crime risk
• Ensuring consumer protection

It is activity-based, which means your obligations depend on what you do, not what you call your business.

SPI vs MPI Under the PSA

Once you fall within the PSA, you must determine your licence type:

• Standard Payment Institution (SPI) for smaller-scale operations
• Major Payment Institution (MPI) for larger, scalable businesses

This decision affects:

• Capital requirements
• Transaction limits
• Compliance obligations

It also directly impacts how your business should be structured.

Understanding the Financial Services and Markets Act (FSMA)

While the PSA governs domestic crypto activities, the FSMA extends MAS’s reach to cross-border operations.

This is where structuring becomes more complex.

What the FSMA Covers

The FSMA applies to businesses that:

• Operate from Singapore
• Provide crypto services to overseas clients

Even if:

• You do not serve Singapore users
• Your platform is “offshore-facing”

Why This Matters

Previously, some businesses attempted to:

• Base themselves in Singapore
• Serve only international markets
• Avoid local licensing

The FSMA closes this gap.

Key Principle Under FSMA

If you operate from Singapore, you are regulated—regardless of where your users are.

PSA vs FSMA: Not a Choice, but an Overlap

A common misconception is that businesses can choose between PSA and FSMA.

In reality:

• PSA governs what you do
• FSMA governs where and how you operate globally

How They Work Together

If you:

• Provide DPT services → PSA applies
• Do so from Singapore for overseas users → FSMA also applies

What This Means for Structuring

Your structure must account for both:

• Local regulatory obligations (PSA)
• Cross-border implications (FSMA)

The Core Structuring Question

When designing your crypto business, the key question is not:

“Which law applies?”

The real question is:

“How should we structure our operations so that they align with MAS expectations under both PSA and FSMA?”

Step 1: Map Your Activities Clearly

Start by identifying every function in your business.

Break it down into:

• User onboarding
• Trade execution
• Asset custody
• Fund transfers
• Liquidity sourcing

Each of these may trigger regulatory obligations.

Why This Matters

Because your structure must reflect:

Where each activity occurs and who is responsible for it.

Step 2: Determine Your Operating Jurisdiction

Next, identify where your business is actually operating from.

This includes:

• Where your company is incorporated
• Where your team is based
• Where key decisions are made

MAS Perspective

If your operations are based in Singapore:

FSMA applies—even if your users are overseas.

Step 3: Define Control Points

MAS places strong emphasis on control.

You need to clearly identify:

• Who controls user funds
• Who executes transactions
• Who manages wallets and keys

Why This Is Critical

Because control determines:

• Regulatory responsibility
• Licensing requirements
• Risk exposure

Step 4: Align Structure With Activities

Once you understand your activities and control points, you can design your structure.

This may involve:

• Separating certain functions
• Defining clear operational boundaries
• Assigning responsibilities appropriately

Important Note

Structuring is not about avoiding regulation.

It is about:

Creating clarity and alignment with regulatory expectations.

Step 5: Build Around Compliance, Not Around Avoidance

One of the biggest mistakes startups make is trying to structure their business to avoid licensing.

This often leads to:

• Artificial complexity
• Weak operational logic
• Regulatory pushback

A better approach is to:

Design your structure to be licensable from the start.

Common Structuring Models (And Their Risks)

Model 1: Singapore Entity + Offshore Operations

Some businesses attempt to:

• Incorporate in Singapore
• Run operations offshore
• Serve international users

Risk

Under FSMA, this structure is still regulated if:

• Control remains in Singapore

Model 2: Non-Custodial Platform

Many startups assume that:

• Not holding funds removes regulatory obligations

Reality

If you:

• Facilitate transactions
• Influence execution

You may still fall within PSA scope.

Model 3: API-Based Infrastructure

Some businesses position themselves as:

• Pure technology providers

Risk

If your API enables trading or transfers:

You may still be regulated.

Key Insight

Structure does not determine regulation.

Activity does.

The Role of Fund Flows in Structuring

Your structure must be reflected in your fund flow diagrams.

These diagrams should show:

• Where funds enter
• How they move
• Where they are held
• Who controls them

Why MAS Relies on Fund Flows

Because they reveal:

• Your true operating model
• Your risk exposure
• Your compliance requirements

If your structure and fund flows do not align:

Your application will face delays.

How Structuring Impacts Your MAS Licence Application

MAS evaluates your structure to determine:

• Whether your business is licensable
• Whether risks are properly managed
• Whether responsibilities are clearly defined

If Your Structure Is Weak

You may face:

• Additional queries
• Requests for restructuring
• Delays in approval

If Your Structure Is Strong

You benefit from:

• Clear application narrative
• Faster review
• Higher confidence from MAS

How CRYPTOVERSE Can Help

Structuring a crypto business in Singapore requires more than legal knowledge—it requires a deep understanding of how MAS interprets business models under the PSA and FSMA.

CRYPTOVERSE helps clients:

• Map their activities under both regulatory frameworks
• Design structures that align with MAS expectations
• Identify and address regulatory risks early
• Build fund flows and documentation that reflect a clear, defensible model

Our goal is not just to help you comply, but to ensure that your structure supports a smooth licensing process and long-term operational success.

Final Thought

Structuring your crypto business in Singapore is not about choosing between PSA and FSMA.

It is about understanding how both apply—and building your business accordingly.

The most successful applicants do not try to work around regulation.

They align with it from the beginning.

Because in Singapore:

Your structure is not just a legal formality.
It is the foundation of your entire licensing strategy.

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