In a significant move, Malaysia’s Securities Commission (SC) has ordered cryptocurrency exchange Bybit, along with its CEO Ben Zhou, to halt all operations in the country. This directive stems from Bybit’s failure to secure the necessary authorization to function as a digital asset exchange (DAX) as stipulated by Malaysian regulations. The SC’s firm stance underlines the crucial role of regulatory bodies in protecting investors from unregulated platforms, emphasizing the need for strict compliance with established laws.
According to Malaysia’s Capital Markets and Services Act of 2007, operating a DAX without formal registration as a Recognized Market Operator (RMO) is considered illegal. Bybit’s inability to comply with these legal requirements poses substantial risks not only to its users but also to the broader financial ecosystem. Regulatory bodies like the SC play a vital role in ensuring that financial entities operate within legal frameworks, thus maintaining market integrity and protecting investors from potential fraud or inadequate financial practices.
Following the enforcement of this order, Bybit has been instructed to disable access to its website and mobile applications for Malaysian users by December 25. Furthermore, the SC has mandated the cessation of all promotional activities targeting Malaysian investors and the immediate termination of the platform’s Telegram support channels. This decisive action indicates the SC’s determination to ensure strict compliance with regulations, highlighting its proactive approach to safeguarding investors against potential risks associated with unregistered exchanges.
Interestingly, this regulatory crackdown is not an abrupt action. Bybit, along with Zhou, has been on the SC’s Investor Alert List since July 2021, a warning to Malaysian investors to steer clear of unregistered entities. The list includes other notable platforms like Bitget and Atomic Wallet, which also operate without proper registration. The SC’s emphasis on relying solely on approved RMOs reinforces the importance of rigorous regulatory scrutiny to protect investor interests.
Despite cryptocurrencies being legal in Malaysia, they are notably not recognized as legal tender. The distinction is crucial as it establishes that while participants can engage in cryptocurrency trading, they must do so through registered and regulated exchanges. According to the SC, there are only six exchanges currently licensed to operate within the country, underscoring the limited choices available to investors seeking compliance and security.
Social media posts from Bybit indicate that they have restricted access for Malaysian users since December 24 in an effort to align with regulatory requirements. The exchange has expressed intentions to re-enter the Malaysian market once they can secure the appropriate licenses. However, the challenges for Bybit extend beyond Malaysia, as the exchange is also facing increased scrutiny in other jurisdictions, including a recent announcement to suspend services for French users due to new regulatory measures set to take effect in early 2025.
Bybit’s current predicament reflects broader challenges faced by cryptocurrency exchanges operating in an increasingly regulated environment. As regulatory bodies across the globe intensify their oversight, exchanges like Bybit must navigate a complex landscape of compliance to restore credibility and maintain user trust.
