From being one of the largest trading platforms in Malaysia to losing credibility, Bybit is on the edge, facing legal troubles. The crypto exchange and its CEO, Ben Zhou, have been the subject of an enforcement case by the Malaysia Securities Commission (SC) for operating without legal registration.
The SC explained, “This decision comes after concerns about the platform’s compliance with local regulatory requirements and protecting investors’ interests.”
The regulator added, “Operating a DAX without obtaining the SC’s registration as a Recognised Market Operator (RMO) is an offense under Section 7(1) of the Capital Markets and Services Act 2007.”
Bybit was ordered to suspend its website, mobile applications, and any other digital platforms in Malaysia. Beginning on December 11, the organization was granted fourteen business days to execute this action.
In addition, Bybit was directed to cease all advertising activities directed at Malaysian investors and to terminate its Telegram support group for Malaysians.
How did Bybit get here?
According to reports, Bybit and Zhou have been included in the regulator’s investor alert list since July 2021 due to the same regulatory violation. However, according to Malaysia’s securities regulator, Bybit has adhered to the enforcement actions as instructed.
Bybit, on their Malaysia telegram channel, said to the investors, “We understand that this may cause some inconvenience […] Once we have secured the appropriate licenses, we look forward to reconnecting with you again in the future.”
裂开。。#bybit #malaysia pic.twitter.com/deMltSxHKY
— 老江🌿 (@KangWeon) December 18, 2024
Still, the SC reminded investors that Malaysian securities laws do not protect those who trade crypto on unregistered platforms and that they are at a higher risk of being victims of financial crimes.
The SC asserted, “This enforcement action underscores our commitment to safeguarding investors and maintaining a fair marketplace.”
Notably, in August, the Bybit exchange also departed France as a result of the country’s efforts to impede the acquisition of operating licenses for crypto companies. This was in anticipation of the European Union’s Markets in Crypto-Assets (MiCA).
Legalities in Malaysia on the crypto industry
Malaysia does not recognize crypto as legal tender. The Central Bank of Malaysia Act effectively excludes crypto from this status. The bank designates the ringgit as the country’s exclusive legal tender.
Although the Act does not explicitly prohibit crypto, it restricts the definition of legal tender to the ringgit. But, the Capital Markets and Services Order classifies crypto as securities. This classification provides them with a specific legal status within Malaysia’s financial regulatory framework.
The regulatory framework is further fortified by the Capital Markets and Services Order. This classifies specific digital currencies and tokens as securities. It places them under the jurisdiction of the Securities Commission [SC) Malaysia.
The SC imposes supplementary compliance obligations on crypto businesses, such as the acquisition of the requisite licenses to operate legally. Organizers of unregistered coin offerings may be subject to a sanction of up to 10 million Malaysian ringgit (approximately $2.5 million) or a maximum of 10 years in prison.
What about other crypto asset trading platforms in Malaysia?
Putting a hold on Bybit is not the last straw for crypto investors. BYDFi is one of the remaining crypto trading platforms that is widely recognized in Malaysia and provides a trading experience for Malaysian traders. It has the capacity to meet the requirements of traders who desire to trade crypto using the Malaysian Ringgit. However, it demands KYC requirements.
Phemex is also renowned in Malaysia for its no KYC policy, which is particularly appealing to merchants. This policy enables them to engage in cryptocurrency transactions without disclosing personal information. However, it does not provide Interest-earning products.
In addition, BingX is an alternative crypto exchange in Malaysia. It offers an innovative platform for Malaysian traders looking to enter the crypto industry. However, it is complex in derivatives trading.
Binance also makes it to the list as an option for Malaysian investors. It is especially for individuals seeking to diversify their crypto portfolio beyond conventional options due to its extensive selection of altcoins. But it also has regulatory Challenges
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