• Bybit blocked Malaysian user logins on Dec 24 due to SC compliance directives.

  • Only six crypto exchanges are legally registered to operate in Malaysia.

  • Bybit plans to re-enter the Malaysian market after obtaining necessary licenses.

Bybit, one of the leading cryptocurrency trading platforms, and Ben Zhou, its chief executive officer, have been ordered to shut down by the Securities Commission of Malaysia (SC). This directive entails closing the exchange’s website and application by December 25th, indicating that the government will not relent in implementing the laws on digital assets. The SC accuses Bybit of engaging in business without a Recognized Market Operator (RMO), which is mandatory under the Capital Markets and Services Act 2007.

Noncompliance with the regulations is something that Bybit has been on the regulator’s list since July 2021, when the exchange was initially placed on the SC’s list of Investor Alerts. This list informs investors of the dangers of associating with unregistered companies, signifying the dangers of these platforms. Bybit's recent compliance efforts include blocking Malaysian users from logging in since December 24th, indicating a proactive stance towards adhering to regulatory demands.

Investor Safety and Market Integrity at Stake

The SC emphasizes that operating digital asset exchanges without proper authorization poses significant risks to investor safety and market integrity. Bybit’s failure to obtain necessary approvals has led to this decisive action to protect Malaysian investors from potential financial crimes. Currently, only six exchanges hold the RMO license necessary to operate legally within Malaysia, ensuring they meet the SC's rigorous legal and operational standards.

This enforcement aligns with Malaysia's broader strategy to regulate cryptocurrencies, where they are legal but not considered legal tender. The SC oversees these regulations to ensure that all market operators adhere to the established compliance frameworks, safeguarding the public's investment and maintaining the integrity of Malaysia's financial system.

Regional and Global Implications for Bybit

The consequence of non-compliance not only affects the Malaysian company, Bybit but also has an external impact. The exchange also experiences regulatory issues in Europe. Recently, it was decided to suspend the work in France because of the strict licensing standards announced by the European Union for the Markets in Crypto-Assets regulation. This regulation pattern shows the rise in the pressure that crypto exchanges around the globe are experiencing as more governments step up their efforts to curb financial offenses and safeguard consumers.

Bybit intends to re-enter these markets legally by securing the required licenses. This commitment to compliance may pave the way for Bybit to reconnect with its user base in Malaysia and Europe, albeit under more regulated and closely monitored conditions. Such steps are crucial as Bybit navigates the complex regulatory environments across different jurisdictions, reflecting a shifting landscape for cryptocurrency exchanges worldwide.

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