As the global interest in digital assets continues to grow, Singapore has emerged as a leading hub for virtual asset fund management. With a clear regulatory framework and strong support from the Monetary Authority of Singapore (MAS), the city-state offers a balanced environment for innovation and compliance. This guide provides an in-depth overview of the licensing requirements, exemption pathways, and operational standards for managing virtual asset funds in Singapore in 2025.
Understanding Virtual Assets Under Singapore Law
Under Singapore’s regulatory framework, virtual assets are assessed based on whether they qualify as capital markets products under the Securities and Futures Act (SFA). If a digital token exhibits characteristics of securities—such as shares, debentures, or units in a collective investment scheme—it falls under MAS regulation and requires appropriate licensing for related activities.
However, not all cryptocurrencies are treated equally. Bitcoin and Ethereum, widely recognized as decentralized and non-security tokens, typically do not fall under securities regulation. In contrast, security tokens, certain NFTs with equity-like rights, and crypto derivatives may be classified as regulated instruments.
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This distinction is crucial for fund managers deciding between seeking a license or operating under exemption.
Licensed Fund Management Companies (LFMCs): Structure and Requirements
In Singapore, any entity engaging in fund management—especially involving capital markets products—must generally hold a Capital Markets Services (CMS) license issued by MAS. For virtual asset-focused funds, the most common structure is the Licensed Fund Management Company (LFMC).
There are two main types of LFMCs:
- Retail LFMCs: Serve both retail and institutional investors.
- A/I LFMCs (Accredited/Institutional LFMCs): Serve only accredited or institutional investors.
The A/I LFMC is particularly popular among crypto fund managers due to its lower entry barriers while still offering credibility and access to institutional capital.
Key Requirements for A/I LFMC License
To qualify as an A/I LFMC, applicants must meet the following criteria:
- Be a Singapore-registered company
- Maintain a minimum paid-up capital of SGD 250,000
- Appoint a CEO and executive director with at least five years of relevant experience, with the executive director being a Singapore resident and full-time employee
- Employ at least two full-time Singapore-based staff members with five+ years of experience in fund management or related fields
- Have at least two Singapore resident representatives
Notably, these roles can overlap—meaning a team of three experienced individuals may satisfy all three personnel requirements if they meet residency and expertise conditions.
Asset Management Thresholds and Compliance Scaling
The compliance obligations scale with the size of assets under management (AUM):
- For AUM below SGD 1 billion, financial resources must be at least 120% of operational risk requirements, following standards similar to Registered Fund Management Companies (RFMCs).
- For AUM exceeding SGD 1 billion, the stricter standards applicable to Retail LFMCs apply, including the need for a dedicated and independent compliance function.
This tiered approach allows smaller crypto-focused funds to operate efficiently while ensuring robust oversight as they grow.
Risk Management and Reporting Obligations
All LFMCs must adhere to MAS’s Guidelines on Risk Management Practices, which mandate comprehensive systems covering:
- Independent and competent risk management functions
- Identification and measurement of risks tied to client assets
- Real-time monitoring and reporting mechanisms
- Documented policies, procedures, and internal controls
Additionally, LFMCs are required to submit:
- Quarterly unaudited reports within 14 days of each quarter-end
- Annual audited financial statements within five months of fiscal year-end
While not mandatory, transparency with clients is strongly encouraged. Fund managers should disclose key information such as:
- Investment strategy
- Valuation methodology
- Leverage usage
- Custodian and trustee details
- Auditor information
- Account closure conditions
Anti-Money Laundering (AML) and Regulatory Notifications
As regulated financial institutions, LFMCs must implement robust AML and counter-terrorism financing (CTF) frameworks. This includes conducting customer due diligence (CDD), ongoing monitoring, and reporting suspicious transactions.
Moreover, any significant changes—such as the appointment of new directors or CEOs—must be reported to MAS promptly. Some changes may require prior approval.
Licensing fees consist of:
- A fixed annual fee
- A variable fee of SGD 5 per representative starting from the 101st representative onward
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Exemption Pathway for Crypto Fund Managers
Not all virtual asset fund managers need a CMS license. Under certain conditions, entities can operate without formal licensing by leveraging exemptions under the SFA.
To qualify:
- The fund must invest solely in non-security virtual assets (e.g., Bitcoin, Ethereum)
- All investors must be accredited or institutional investors
Accredited investors include individuals with net financial assets exceeding SGD 1 million (or income over SGD 300,000 annually), or corporations with net assets over SGD 10 million.
Such exempt funds benefit from reduced regulatory burden but are still expected to follow best practices in governance, risk management, and AML compliance.
Digital Payment Token (DPT) Services Consideration
Under Singapore’s Payment Services Act, handling digital payment tokens (DPTs) like Bitcoin may require a separate license. However, if DPT transactions are incidental or necessary to fund management activities—such as accepting crypto subscriptions or distributing redemptions—this activity may fall under exemption.
This carve-out provides flexibility for crypto-native funds that use digital assets operationally but are not engaged in exchange or custody services.
Choosing Between Licensed and Exempt Structures
There are two primary pathways for setting up a crypto fund in Singapore:
- Exempt Structure: Ideal for niche or founder-led funds targeting only accredited investors and investing exclusively in non-security tokens. Offers lower costs and faster setup.
- Licensed Structure (via VCC): Recommended for institutional-grade funds. Typically structured as a Variable Capital Company (VCC) managed by an MAS-licensed fund manager. Enhances credibility with institutional LPs and facilitates global fundraising.
While exempt structures offer agility, licensed setups provide greater trust and scalability—especially when seeking capital from pension funds, family offices, or sovereign wealth entities.
Frequently Asked Questions (FAQ)
Q: Do I need a license to manage a Bitcoin-only fund in Singapore?
A: Not necessarily. If your fund only invests in non-security tokens like Bitcoin and serves accredited investors exclusively, you may operate under exemption without a CMS license.
Q: Can foreign fund managers apply for an A/I LFMC license?
A: Yes, but key personnel—including the executive director and at least two staff—must be based in Singapore and meet experience requirements.
Q: What happens if my AUM exceeds SGD 1 billion?
A: You must comply with enhanced requirements, including establishing an independent compliance team and meeting higher capital adequacy standards.
Q: Are NFTs considered securities in Singapore?
A: It depends on their functionality. If an NFT represents ownership or profit-sharing rights akin to shares, it may be deemed a security and trigger regulatory obligations.
Q: Can I accept investor subscriptions in cryptocurrency?
A: Yes, provided you comply with AML/CFT obligations. Such transactions may also fall under DPT service exemptions if incidental to fund management.
Q: Is audit mandatory for exempt funds?
A: While not legally required, audits are highly recommended to build investor confidence and ensure transparency.
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Conclusion
Singapore’s balanced approach to virtual asset regulation makes it one of the most attractive jurisdictions for crypto fund formation in 2025. Whether pursuing a licensed A/I LFMC route or operating under exemption, managers must prioritize compliance, risk management, and investor transparency.
By understanding the nuances between security vs. non-security tokens, leveraging available exemptions wisely, and aligning with MAS expectations, fund managers can build scalable, credible, and compliant digital asset businesses in one of Asia’s premier financial centers.
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