The Securities Commission (SC) of Malaysia has ordered cryptocurrency exchange Bybit to cease its operations in the country, citing violations related to running an unregistered digital asset exchange (DAX). The directive, effective from December 11, requires Bybit to shut down its website and mobile applications within 14 business days, in addition to halting all advertisements targeted at Malaysian investors and disbanding its Malaysian Telegram support group.
Enforcement and Compliance
The SC’s orders were directed specifically at Bybit’s CEO, Ben Zhou, who was tasked with ensuring the company’s compliance with the Malaysian securities regulations. As of December 27, the SC confirmed that Bybit had complied with the directives issued. This development in Malaysia paralleled Bybit’s recent decision to cease operations in France due to heightened regulatory scrutiny, planning to stop withdrawal and custody services for French users by January 8, 2025.
In its statement, the SC emphasized the importance of compliance with the Capital Markets and Services Act 2007, noting that operating a DAX without registration as a Recognised Market Operator (RMO) constitutes an offense. The SC has urged Malaysian investors to only use registered DAX platforms, which are subject to stringent vetting and regulatory guidelines designed to safeguard investor interests under Malaysian securities laws.
The SC highlighted the dangers associated with investing through unlicensed entities, including heightened risks of money laundering and fraud. Investors not using licensed platforms do not receive the protections afforded under Malaysia’s securities regulations, potentially exposing them to significant financial losses.
The Malaysian government has been active in its efforts to curb crypto-related crimes. In June 2024, the Inland Revenue Board of Malaysia launched “Ops Token,” targeting companies that failed to report their cryptocurrency transactions. This operation led to the seizure of evidence related to tax evasion from mobile devices and computers involved in crypto trading.
Moreover, on December 23, the SC added the Web3 wallet service Atomic Wallet to its list of financial companies banned from operating in Malaysia for similar reasons as Bybit—operating a DAX without proper registration.
What The Author Thinks
As cryptocurrencies continue to permeate the global financial system, the challenge for regulators around the world is to balance the promotion of innovation with the need to protect investors from potential harms. Malaysia’s proactive stance in regulating digital assets reflects a broader trend of governments taking decisive action to ensure that the burgeoning crypto market does not become a haven for financial misconduct.
The recent actions by Malaysia’s Securities Commission underline the importance of regulatory compliance and demonstrate the government’s commitment to maintaining a stable and secure financial environment. These measures not only protect investors but also enhance the integrity of the financial system by preventing abuses such as money laundering and fraud.
As we move forward, it will be crucial for both crypto businesses and regulators to engage in continuous dialogue to foster an ecosystem that supports technological innovation while ensuring robust consumer protection and adherence to the law.
Featured image credit: Ahmad Rithauddin via Flickr
Follow us for more breaking news on DMR