Bybit, one of the leading cryptocurrency exchanges, has been instructed by the Malaysian Securities Commission (SC) to cease its operations in the country. The platform and its CEO, Ben Zhou, face enforcement action for failing to comply with regulatory requirements, particularly operating without being registered as a Recognised Market Operator (RMO).
The SC emphasized that this decision was necessary to address concerns over Bybit’s compliance and ensure investor protection. The regulator highlighted that operating a digital asset exchange without proper registration violates Section 7(1) of Malaysia’s Capital Markets and Services Act 2007.
Suspension of operations and advertising
In a directive issued by the SC, Bybit was ordered to suspend all access to its website, mobile applications, and other digital platforms within Malaysia. This action must be completed within fourteen business days, starting December 11. Additionally, Bybit has been instructed to halt all advertising targeting Malaysian users and to shut down its Malaysia-based Telegram support group.
Bybit responded to the enforcement action through its Telegram channel, addressing local investors and expressing its intent to secure appropriate licenses in the future. The platform acknowledged the inconvenience caused to users and stated its hope to return once the regulatory requirements are met.
A history of regulatory issues
This enforcement action against Bybit follows earlier warnings by the SC. In July 2021, the exchange and its CEO were placed on the regulator’s investor alert list for the same regulatory violations. Despite being on this list, Bybit continued operations until now. The SC reiterated that investors using unregistered platforms lack legal protection under Malaysian securities laws, leaving them vulnerable to financial risks.
裂开。。#bybit #malaysia pic.twitter.com/deMltSxHKY
— 老江 (@KangWeon) December 18, 2024
This incident mirrors Bybit’s struggles in other jurisdictions. The platform exited France in August due to regulatory challenges tied to the European Union’s Markets in Crypto-Assets (MiCA) regulations.
Crypto regulation in Malaysia
Malaysia’s legal framework does not recognize cryptocurrency as legal tender, with the ringgit being the sole official currency. However, the Capital Markets and Services Order classifies cryptocurrencies as securities under the SC’s oversight. Cryptocurrency exchanges must secure licenses and comply with strict regulations to operate legally.
Non-compliance can result in severe penalties, including fines of up to 10 million ringgit or imprisonment for up to 10 years. While Bybit faces suspension, other platforms such as BYDFi, Phemex, BingX, and Binance remain operational in Malaysia. However, these exchanges must also navigate the country’s stringent regulatory landscape to continue serving local investors.
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