Bybit Mandated to Halt Operations in Malaysia for Regulatory Violations
Malaysia’s Securities Commission (SC) has taken a firm stance by ordering cryptocurrency exchange Bybit and its CEO Ben Zhou to halt all activities in the nation. This decision follows Bybit’s failure to secure the necessary authorization to operate as a digital asset exchange (DAX) in compliance with local regulations.
Regulatory Oversight Cracks Down on Non-Compliant Crypto Practices
The recent mandate from the SC highlights serious concerns regarding Bybit’s compliance with Malaysian laws. The Commission stressed the importance of safeguarding investors by enforcing adherence to the Capital Markets and Services Act 2007, which prohibits running a DAX without prior approval as a Recognized Market Operator (RMO). Bybit’s violation of this regulation poses significant risks to the public.
In response to these developments, Malaysian authorities have directed Bybit to shut down its website and mobile apps by December 25. Furthermore, the SC has ceased all marketing activities targeting Malaysian investors and demanded the immediate closure of the platform’s Telegram support group for local users. Notably, this action comes after Bybit and Zhou were added to the SC’s Investor Alert List in July 2021 as unregistered entities, a warning to investors.
The Investor Alert List also names other platforms like Bitget and Atomic Wallet, which operate without the necessary registration. In light of these ongoing issues, the SC has advised investors to exclusively engage with licensed RMOs, subject to thorough regulatory scrutiny ensuring compliance with legal and operational standards.
Context: Cryptocurrency Regulation Landscape in Malaysia
While cryptocurrencies are permitted in Malaysia, they do not hold legal tender status. The SC’s regulatory framework emphasizes stringent compliance requirements for operators to maintain robust oversight of the cryptocurrency sector. Presently, only six exchanges hold licenses to operate in the country, highlighting the competitive regulatory environment in which companies like Bybit operate.
Analysis: Bybit’s Broader Impact and Challenges in the Cryptocurrency Sector
As part of its compliance efforts, Bybit has notified Malaysian users of restricted login access since December 24. The exchange intends to re-enter the Malaysian market upon obtaining the required licenses. However, Bybit faces challenges beyond Malaysia. It recently announced plans to suspend withdrawal and custody services for users in France from January 8, 2025, due to increased scrutiny from French regulators.
Established in 2017, Bybit is a major global cryptocurrency exchange, with assets exceeding $16 billion according to CoinMarketCap. Nevertheless, its regulatory hurdles present a significant challenge to its operations and reputation across various markets.
Conclusion: Insights into Bybit’s Regulatory Struggles
In conclusion, the Securities Commission of Malaysia’s directive for Bybit to halt operations underscores the critical importance of regulatory compliance in the cryptocurrency sector. The need for licenses not only safeguards investors but also shapes the competitive landscape for exchanges in the country. Bybit’s ability to address regulatory requirements and rebuild trust among users will be pivotal to its future in Malaysia and beyond.
