Bybit Faces Regulatory Clampdown in Malaysia
Cryptocurrency exchanges are facing increasing regulatory scrutiny as authorities demand full compliance with local laws. The era of operating without proper licensing and registration is drawing to a close. The situation with Bybit in Malaysia and France underscores this growing trend.
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The Securities Commission of Malaysia (SC) has taken enforcement action against Bybit for operating without the required registration.
The regulator has ordered Bybit to suspend its web platform, mobile apps, and other digital services within the country. Bybit has been given 14 business days to comply with the directive. Additionally, the exchange has been instructed to halt all advertising targeting Malaysian investors and shut down its Telegram support group for users in Malaysia.
Order Issued to Bybit. Source: sc.com.my
Malaysia’s Securities Commission (SC) made its decision due to concerns about Bybit’s non-compliance with local regulations and the need to protect investors. Operating a trading platform without registration as a Recognized Market Operator (RMO) is a legal violation. Bybit and its CEO, Ben Zhou, have been on Malaysia’s government blacklist since July 2021.
The SC emphasized that investors using unregistered platforms are not protected under local securities laws and face an increased risk of falling victim to financial crimes. Currently, only six cryptocurrency exchanges are officially registered and licensed in Malaysia, primarily including local platforms such as Luno Malaysia, which also complies with Sharia requirements.
Related: Cryptocurrency and Shariah Law: Navigating the Intricacies
A similar scenario is playing out in France. In August 2024, reports indicated that Bybit would exit the French market, discontinuing withdrawal and custody services for French users starting January 8, 2025. This decision comes in response to stricter licensing requirements for cryptocurrency companies as the EU prepares to implement the Markets in Crypto-Assets (MiCA) regulation. MiCA aims to establish uniform rules across EU member states, significantly increasing compliance demands for crypto exchanges.
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